ORAL ANSWERS TO QUESTIONS

CULTURE, MEDIA AND SPORT

The Secretary of State was asked—

Horse Racing Levy

Laurence Robertson: What recent discussions he has had with representatives of horse racing on modernising the levy system; and if he will make a statement.

Gerry Sutcliffe: I have met representatives of the horse racing and bookmaking industries on a number of occasions and discussed the horserace betting levy. I would like to pay tribute to both industries for their flexibility in agreeing the 48th levy scheme without the need for Government determination, and for their commitment to continue the work on modernising the levy.

Laurence Robertson: I thank the Minister for that response. We welcome the fact that an agreement was reached on the levy, but it happened at the eleventh hour, in the 59th minute. Each year, wrangling over the levy holds up the modernisation process. Is there nothing that the Minister can do to push that process along, and to concentrate the minds of the industry to make progress so that the Government are no longer a part of it? Will he consider setting up a forum for those of us who want to contribute to the debate that will allow us to do so, and which will prevent others in the industry from running away from the problems or from stifling debate?

Gerry Sutcliffe: I thank the hon. Gentleman for his work on the all-party group on racing, which helped us to deal with these complex issues. He was right to say that the deal took place at the eleventh hour, in the 59th minute, but that was better than last year when the Secretary of State had to determine it. It is important that those in the industry recognise that they have to work together, and I was pleased to see the issues raised by Sir Philip Otton's report, which was commissioned by the levy board. The hon. Gentleman may be right, and I am due to receive a report on modernisation from the levy board on the 30 April next year, but in the mean time, all of us who have the interests of racing and betting at heart may want to consider the issues at stake. I will get back to him on the setting up of such a working group.

Jim Sheridan: I welcome the agreement between both organisations, and look forward to a sustainable future for both of them. Will the Minister remind them that horse racing is a community sport, with many families going to race courses to enjoy a day out? I hope that they will keep that at the back of their mind—or at the front—when having discussions in the near future.

Gerry Sutcliffe: I pay tribute to my hon. Friend for his work with local race courses. He is right to say that racing is a universal sport that everyone can enjoy, but it is a commercial entity. Complex issues affect the sport, and sports betting, and we need the industries to work together. It should not be left to the Government at the eleventh or twelfth hour to resolve the issues. The industries should consider those issues in a commercial and practical way, while remembering that the sport is there to serve the people. My hon. Friend's points will be well noted by both sectors.

Philip Davies: Did the Minister see the article in the Racing Post last week that suggested hundreds of betting shops are likely to close in the near future if things do not change in the industry? Would he agree that there was little for bookmakers in the last-minute agreement? If the bookmaking industry is going to survive and thrive in this country, any future levy settlement will have to be much more in their favour.

Gerry Sutcliffe: I pay tribute to the hon. Gentleman for his work on the all-party group on racing. He hits the nail on the head: this is a complex, commercial issue involving two sectors that rely on each other. I do not want to comment on who won or lost. It is important that both thrive, and that they recognise the issues that they face. On the back of the successful discussions, they can deal with those complex issues, while recognising that they are inter-dependent.

David Taylor: Can the Minister confirm that the levy will produce about £100 million in the present year? The British Horseracing Authority is seeking a sum adjacent to £150 million, while the bookmakers' representatives believe that they should pay only £40 million because of the costs of Turf TV, to which they contribute. Racing is socially, culturally and economically important. Will the Minister say whether betting exchanges are likely to pay their due share towards those costs?

Gerry Sutcliffe: I pay tribute to the work that my hon. Friend does for his local race course. There are many issues facing betting, as I said earlier, and he tempts me down a course of saying what I think about the negotiations. I am not prepared to do that, other than to say that I am glad that they were successful. I have asked for further work to be done on the matter of betting exchanges. It is clearly an issue when people can bet from abroad and pay no contribution towards the levy.

Tobias Ellwood: I do not know whether you are a betting man, Mr. Speaker—[ Laughter.] You are smiling. I do not know how I should read that, but I suggest that you take no advice from this Government, who have not had a lot of luck with the horses recently. We have just heard that there is still a problem with the levy, and we know that the on-course bookmakers dispute rumbles on. I think that we were promised in 1999 that the Tote would be sold off, but that option has been kicked into the long grass. When will the Minister's Department take these matters seriously, and ensure that racing stays on the back pages, not on the front pages because of unresolved problems?

Gerry Sutcliffe: We might not have been lucky on the horses, but we were certainly lucky with by-election last Thursday, given the win that we had.
	It is important to do the right thing by the industry and the sectors. As I understand it—the hon. Gentleman will tell me if I am wrong—the Opposition supported our decisions on the sale of the Tote, the levy and on-course bookmakers. I do not know why he feels that he should chide us when he supports our actions.

Digital Television

Anne McIntosh: What assessment he has made of levels of access to digital television services in the north of England; and if he will make a statement.

Barbara Follett: At present, 83 per cent. of households can receive digital terrestrial television in the Yorkshire ITV region; 94 per cent. in the Granada region; 91 per cent. in the Tyne Tees region, and 51 per cent. in the Border region. After switchover, it is expected that the figure will rise to 99 per cent. for the Yorkshire, Granada and Tyne Tees regions, and 98 per cent. for the Border region. We do not have regional figures for digital satellite or cable coverage, but 98 per cent. of UK households can receive satellite services, and approximately 49 per cent. have access to cable.

Anne McIntosh: I am grateful for that answer, but is it right that those who live in the Yorkshire and Humber region pay their full television licence fee but do not receive the same status as many other regions? What advice is the Minister giving those who live in the Vale of York and may be about to change their television sets about what equipment to purchase?

Barbara Follett: I do not know the answer to the hon. Lady's first question, but I will write to her. People in the Vale of York should buy the latest 8k television sets because they are the up-to-date models.

Don Touhig: Visually impaired people, including those in the north of England and in my constituency, will benefit from the digital switchover help scheme, which enables them to receive audio described programming. Does my hon. Friend agree that 20 per cent. of programmes broadcast should provide that service, rather than the current 10 per cent. target?

Barbara Follett: I agree with my right hon. Friend that there is a case for what he suggests, and we will examine it.

Greg Mulholland: The north of my constituency is rural and semi-rural, and many of my constituents can get only four terrestrial channels and cannot receive Freeview, yet are expected to pay the full licence fee. They are even more upset because they feel that they are not being sufficiently prioritised in the digital switchover, when their needs are clearly greater than those in other areas. What does the Minister plan to do about that?

Barbara Follett: The digital signal will improve for everyone, wherever they are, when analogue is switched off. People do not realise the advantages of that. I stress that most households in the country currently have at least one digital television.

Don Foster: In February, the Department for Communities and Local Government recommended robust exploration of options to include a return path in digital TV set-top boxes. Why are people in the north of England and elsewhere losing out on options such as smart metering, support with independent living and electronic access to local government services simply because the Minister has failed to follow the advice of her colleagues in that Department? If, as she told me in a letter, more research is needed, has she commissioned it?

Barbara Follett: The research is being done. I hoped that I had made that clear to the hon. Gentleman in my letter and I am sorry that I did not. I agree that the more versatility we can supply, the better, but it does not seem currently to be a cost-effective option.

BBC (Public Service Broadcasting)

Hugh Bayley: What recent discussions he has had about the BBC's performance of its public service broadcasting responsibilities.

Andy Burnham: I have regular discussions with the BBC Trust, the BBC and Ofcom, which cover a range of issues.

Hugh Bayley: Commercial pressures are forcing ITV to reduce its commitment to regional programming. Does my right hon. Friend agree that the BBC should not slavishly play the ratings game and ape ITV, with fat-cat salaries for top presenters and executives, but put public money, which comes from licence fee payers, into regional television and high-quality local radio programmes?

Andy Burnham: On ITV, as we move towards a full digital television world, the basis on which we have regulated ITV hitherto changes. It is important to understand that the financial case changes for the regional programming that we have received for many years. However, I agree with my hon. Friend that we want public service broadcasting to build on the best of what we have got—strong programming, with a regional identity and regional news, which people value greatly, provided by not only the BBC.

John Whittingdale: Quite apart from the behaviour of Jonathan Ross and Russell Brand, does the Secretary of State share the concern expressed by viewers of the BBC and other public service channels about the torrent of gratuitous bad language that is now found on programmes ranging from comedy to cookery after 9 pm? Does he think that the time has come when broadcasters may need to reconsider what is publicly acceptable in mainstream entertainment shows?

Andy Burnham: May I welcome what the Chair of the Select Committee on Culture, Media and Sport has just said? I do not expect him to read all my speeches, but if he reads some of them, he will see that since I took on this job, I have spoken many times about the importance of maintaining standards, particularly in a changing world. People can look online for all kinds of information, gossip and so on, but TV needs to uphold standards in this changing world. That is incredibly important. I welcomed very much what the chairman of ITV said last week about the importance of the watershed. I note that one newspaper— The Sunday Telegraph, I think—did a survey that found a spike in programmes containing heavy use of swearing immediately after the watershed. I do not think that that is acceptable. The watershed is there as a guide to broadcasters. The public clearly understand that programmes can reflect the language that is used, but that there should not be gratuitous use of bad language on television.

Barry Sheerman: Certainly I recognise that the BBC is still a great national institution and I am usually a great supporter of it. However, if we have a public sector broadcaster that is funded by the licence fee, should it not be more independent in its news gathering? Personally, I am sickened by the number of times we have to hear what the papers say and by how the lead from all that Conservative press outside is slavishly followed on the BBC. Why can it not get its own news?

Andy Burnham: If my hon. Friend looks at research into how the public value news, particularly that provided by the BBC, he will see that they find it to be trustworthy, impartial, accurate and of high quality. They depend on it very much and as far as I am concerned, the BBC continues to provide an excellent news service.

Robert Goodwill: The BBC should be providing programmes that the whole family can watch together. Does the Secretary of State agree that it would be nice to see "The Generation Game" return to our screens on Saturday nights, albeit not presented by Mr. Ross or Mr. Brand?

Andy Burnham: All of us, or most of us, are television viewers and it always tempting to pass comment on editorial matters in the House and amplify our views to the nation about the kind of programmes that we should be seeing. We should mainly resist the temptation to comment on editorial matters, although the temptation is great in my case, having seen the wonderful and talented Laura White harshly voted off "The X Factor" on Saturday. She happens also to be my constituent, so I should probably say no more on that topic. However, I hope that the hon. Gentleman will agree that this is not a good place for politicians to comment on every editorial decision that the BBC or other broadcasters take.

Andrew MacKinlay: The millions of people who live in the counties in the M25 ring around London are much more numerous than all the people in Scotland, Wales and Northern Ireland put together, yet they are badly served by BBC news gathering and provision. It really is time that the Secretary of State told the BBC to get a move on and provide proper news reporting facilities and proper news programmes for places such as my area of Essex, on both radio and television, and to recognise that there are boundaries such as the Thames Gateway that need to be embraced. We are being badly served, yet we are millions of people more than those in the other countries, which, very important though they are, each have almost their own BBC Scotland service. Discuss.

Andy Burnham: My hon. Friend may not have noticed, but the BBC Trust is at present in a mode where it is receiving constructive criticism on the services that it provides. I would encourage him to make his views known to the BBC Trust, which I am sure will take the strength of feeling that he has just displayed on board.

Jeremy Hunt: Does the Secretary of State agree that one of the things that has emerged over the past few weeks from the Russell Brand-Jonathan Ross incident is that it is difficult for viewers to know exactly to whom they should complain if they are unhappy with BBC programmes that are funded by their licence fee? Should they complain to the BBC management, the BBC Trust or Ofcom? In view of that, does he agree that it is absolutely essential that viewers should be represented by an independent body that champions the needs of licence fee payers, and not by an organisation that defends the BBC as an institution?

Andy Burnham: Let me say quite clearly that the episode to which the hon. Gentleman refers was a serious lapse of broadcasting standards, and, indeed, of the editorial controls designed to uphold those standards. Furthermore, the BBC management was too slow to recognise the seriousness of the situation. However, I would refer the hon. Gentleman to the statement issued by the BBC Trust on 30 October, which set in train a whole range of actions to ensure that there would be no repeat of that episode. One example of those actions is the review of the BBC's editorial guidelines.
	On the hon. Gentleman's wider point, I think that it is clear to the public that the BBC Trust can and will take the issues that are referred to it and challenge the BBC on them. It already has a record of doing that on behalf of the licence fee payer. It is also true to say that Ofcom has a role to play in taking a wider view of broadcasting and ensuring that standards across the board are upheld. Those two roles are complementary, and they are working well. Indeed, in this case, the regulators have set action in train and done their job.

Jeremy Hunt: If the system works so well, will Secretary of State explain why it is so difficult for licence fee payers, even after freedom of information requests, to find out the salaries paid to BBC management or BBC stars? Should not the first lesson be that, if the BBC is to restore confidence in what it does, it needs to be totally transparent? This is our money, not the BBC's, and we are entitled to know how it is being spent.

Andy Burnham: I agree with the hon. Gentleman that the BBC Trust has a job to do in representing the licence fee payers to the BBC management and the BBC executive. I also agree that, if it is to do that job effectively, it is important for there to be proper transparency and disclosure of information that can have a bearing on public opinion in relation to the BBC. However, I would refer him to some of the strong actions that the BBC Trust has already taken since it came into existence. An example is the King report, which looked into news reporting across the four home nations. There should always be disclosure of information, where that is in the public interest, and if the hon. Gentleman would like to write to me to suggest further areas in which that could be improved, I shall give the matter my consideration.

Public Service Broadcasting

Adam Holloway: What recent discussions he has had with Ofcom on the public service obligations of the broadcast media.

Andy Burnham: I have regular meetings with the chief executive of Ofcom to discuss broadcasting issues. These meetings often include discussion of public service obligations, which are central to Ofcom's current review of public service broadcasting.

Adam Holloway: But apart from that, is there anything that the Minister can actually do to stop the slide into tabloid television at the BBC? For example, what could be done to reinforce the excellent and totally unbiased coverage by my sometime employer, BBC news and current affairs?

Andy Burnham: As I have said before, hon. Members will have their own views on the services provided by the BBC. However, it is important in this instance not to let the failings of one part of the BBC lead to a situation in which the whole organisation is tainted. There are many professionals within the BBC who provide an excellent standard of service, and we would do well to remember that. Clearly, there were serious failings in this particular case, but I urge the hon. Gentleman not to think that that damns all the BBC's coverage; it does not.

Denis MacShane: Mr. Speaker, if I used that English vernacular word that begins with f and ends in k, you would chop me off at the knees—if not higher—before I had even got up. Yet all the broadcasters now use it regularly, and it is really offensive. This is not a watershed matter. There are plenty of children watching TV programmes on Friday, Saturday and Sunday nights after 9 o'clock. I have watched Jamie Oliver reporting from Rotherham, and I have watched quiz shows, and I hear f, f, f, f. Please tell the BBC and Ofcom that we do not hear that in France, Germany or America, so why, with our great language, does British broadcasting have to be in the linguistic sewer?

Andy Burnham: My right hon. Friend has expressed himself very clearly and trenchantly. The report that I mentioned a moment ago revealed an increase, indeed a spike, of bad language immediately after the watershed, which suggests that it needs to be said that it is not obligatory to use bad language after the watershed.
	I believe that my right hon. Friend speaks for many people in the country in saying that while people accept that the language used on television programmes ought to reflect the language used in the country as a whole, there are occasions on which the line has clearly been crossed, and I know that others share the discomfort that he has so eloquently expressed.

Andrew MacKay: While I welcome the Secretary of State's desire for transparency in the BBC, may I tempt him to go a little further and say that, as BBC staff are public servants like Members of Parliament, its senior executives' salaries should be published, as should their expenses?

Andy Burnham: I do not consider it right for me, or any other Minister, to provide a running commentary on the levels of individual salaries in the BBC, just as it is not right for me to provide a running commentary on the salaries of footballers, although I am often asked to do that. However— [Interruption.] There is a "however" coming. However, there is significant public interest in these issues, and they do affect public confidence in the BBC. It is therefore important for the BBC management and trust to show sensitivity to them, particularly when market conditions are changing and the rest of the country is facing real pressure in an economic downturn.
	I agree that a judgment needs to be made about these issues, and—as I told the hon. Member for South-West Surrey (Mr. Hunt) a moment ago—I believe that information needs to be released into the public domain to allow people to make that judgment.

Neil Gerrard: I am sure my right hon. Friend is aware that two of the three models for the future of public service broadcasting currently being considered by Ofcom would probably result in a narrowing of its provision. When he examines Ofcom's recommendations, will he please bear in mind that we do not want a watering down of broadcasters' obligations, or a restriction of provision to just one or two public service broadcasters?

Andy Burnham: I understand my hon. Friend's point. The issues that he has raised are very much up for discussion at the moment. The nature of our regulation of broadcasting, particularly commercial public service broadcasting, is changing. We need a debate to establish the best way in which to sustain the aspects that the public like and on which they depend, which will mean devising a new way of sustaining public service content beyond the BBC in the future.
	I agree that it is important to have public service broadcasting that is more than the BBC, but precisely how that can be achieved is a matter for debate. As my hon. Friend will know, Lord Carter has been appointed to take a detailed look at the issues, and to report and make recommendations early in the new year.

Broadcasting (Scotland)

Jo Swinson: What recent representations he has received on the potential transfer to the Scottish Executive of his powers in respect of broadcasting in Scotland.

Andy Burnham: None, other than from Ministers in the Scottish Government and Scottish National party Members of Parliament.

Jo Swinson: Although the Scottish Broadcasting Commission recently found that legislative powers over broadcasting should be retained at Westminster, it also concluded that broadcasting should be more accountable to the Scottish Parliament. That is in line with concerns across the whole United Kingdom about broadcasting. Does the Secretary of State not think that we need to find a better way for the voices of the nations and regions to be heard on this issue?

Andy Burnham: I welcome the final report of the Scottish Broadcasting Commission, entitled "Platform for Success". It has come up with balanced and measured conclusions. Indeed, it has drawn the only conclusions that could possibly be drawn by a review of broadcasting.
	As I said to my hon. Friend the Member for Walthamstow (Mr. Gerrard) a moment ago, this is very much a live debate, and obviously the commission's regulations need to be fed into that process and given due consideration. I hope, however, that the hon. Lady will join me in welcoming the commission's explicit rejection of the break-up of broadcasting in this country and the balkanisation of the BBC.

Pete Wishart: I am glad that the commission's report has overwhelming and enthusiastic support from all parties in the Scottish Parliament. Can the Secretary of State assure me that he will work hand in glove with the Scottish Government to ensure that all its recommendations are implemented in full, particularly those that are within his gift down in this House?

Andy Burnham: I am interested to hear that the hon. Gentleman welcomes the report, as it was my understanding that his party's stated policy was to examine the case for devolution within broadcasting, whereas, rather embarrassingly for him and his colleagues, the commission has explicitly rejected the central argument it was set up to test. We will give the recommendations due consideration because they are important and they deserve to be given careful thought.  [Interruption.] We will— [Interruption.] If anybody were to do that in the Select Committee that the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) chairs, I am sure they would receive a stern rebuke from the Chair. We will consider the recommendations, but I am glad that the main plank of the Scottish National party's argument on broadcasting has been broken by its own commission.

Licence Fee

James Gray: What recent discussions he has had with the BBC Trust on the licence fee.

Andy Burnham: I have had no discussions on the current licence fee settlement, which was set two years ago by my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell). I have had discussions with the trust on future funding options for public service broadcasting as part of my regular dialogue with it and other broadcasters.

James Gray: Despite the many good things they do, we have been giving the BBC and the BBC Trust a well deserved kicking this afternoon, but is the Secretary of State the slightest bit surprised that in this post-Brand, post-Ross era—and also in this post-digital era, where we can pick up hundreds of channels free of charge or at low cost—a recent MORI poll should discover that 47 per cent. of people asked concluded that £140 a year for the licence fee is very poor value for money?

Andy Burnham: I am disappointed at the tone of the hon. Gentleman's question. If he were to cast his mind back a little further than just the past two weeks, he would recall that many people in this House and beyond were deservedly congratulating the BBC on its superb coverage of the Beijing Olympics. I think that, on the whole, people get excellent value for their licence fee. The issues the hon. Gentleman identified were looked at when the charter renewal process was taken through by my right hon. Friend the Member for Dulwich and West Norwood, and there was found to be majority support for the continuation of the licence fee. There will always be a debate about whether it is set at the right level, but, as I have said, on the whole the BBC provides very good value for money, and British public service broadcasting, of which it is the bedrock, is admired around the world.

Eric Illsley: My right hon. Friend the Secretary of State said a few moments ago that it was not down to him to keep a running tally of salaries within the BBC, but does he think it is right for a senior BBC executive to be awarded a pay rise this year of £100,000, when other workers in public sector-funded organisations are required to accept pay rises at and around 2 per cent? Does he think that is a good use of licence fee payers' money?

Andy Burnham: What the BBC pays its staff is a matter for the BBC, but it is a matter for the BBC Trust to ensure that maximum value for money is achieved by the BBC management and executive. It is important that the BBC shows sensitivity on these matters and understands the wider climate in which we are all operating. If it does so, that is the right way to maintain high public confidence in the BBC in the long term.

ITV (Regional News)

Norman Baker: What recent discussions he has had with Ofcom on the provision of regional news on ITV.

Andy Burnham: Regional news provision on ITV forms a key part of Ofcom's current public sector broadcasting review and is therefore one of a wide range of broadcasting issues discussed at my regular meetings with Ofcom's chief executive.

Norman Baker: I thank the Secretary of State for that answer, and I hope that he will agree that, over the past 50 years, ITV's regional news output has been one of the great successes of that channel. However, will he also accept that we are now seeing a series of highly regrettable cuts in excellent areas such as Meridian? What steps does he feel he can take to ensure that either ITV or a different public service broadcaster provides regional news as an alternative to the BBC?

Andy Burnham: As I said earlier, it is important to understand that the ITV licences are changing. A phrase was used some time ago—that they were a licence to print money. That is changing as we move to a world where the ITV franchise is not very different from others in a multi-channel world. However, I agree with the hon. Gentleman that regional news and production is one of the successes of ITV over many generations—the company's regional roots are what many people like about ITV. It has put forward revised proposals on regional news, and Ofcom is conducting a consultation on them until early December. I am sure that Ofcom will bear in mind the views that the hon. Gentleman has just expressed, but I also urge him to make further representations before the closure of that deadline.

Fiona Mactaggart: Is the Secretary of State aware that there is real concern among local newspapers about the competitiveness of the local media market? They believe that the BBC's most recent attempt to spend £68 million on an online video service will interfere with their ability to make a profit out of their local internet-based services.

Andy Burnham: I recognise the concern in the newspaper and publishing industries about the proposals, and the BBC Trust will consider this issue later this month. Regarding the job that the trust does, in addition to the issues I mentioned earlier, it is now required to conduct a wider public value test on any new services that the BBC intends to introduce, which includes a market impact assessment. The trust is therefore required to consider these issues in the round, and not just to look at the BBC. As my hon. Friend said, there are widespread concerns. They have been expressed to the trust, and I am sure that it will take them into account.

Graham Stuart: Further to the question from the hon. Member for Slough (Fiona Mactaggart), local newspapers are among the most vibrant and dynamic locally based institutions in this country, ensuring that our democracy is delivered locally, as well as nationally. As we have seen with the impact on regional news, the BBC's going in further and driving local newspapers out of business will have a major impact on the variety and diversity of our media. This creeping monopoly cannot be allowed to proceed, and we cannot leave this issue to the chairman of the BBC Trust, when it is the Secretary of State who should defend the right of the people to have the news provided locally.

Andy Burnham: I agree with the hon. Gentleman that local newspapers are a much-valued part of the media industry. My constituents, I am sure, are very similar to his, and they depend on the local press in the Leigh area as a trusted source of news. I also appreciate the urgency of these issues. Two respected national newspaper editors are writing about them in today's  Media Guardian, presenting a well-argued and persuasive case for ensuring that we appreciate the pressures on the newspaper industry. All these issues will be considered in the round, and that is why I say to the hon. Gentleman that that is the job of the BBC Trust. It is able to take a broader view, and it is important that we let it do its job.

Sport England

Graham Allen: What discussions he has had with Sport England on its contribution to the development of community sporting facilities as part of regeneration initiatives; and if he will make a statement.

Gerry Sutcliffe: I have had no recent discussions with Sport England on this matter. However, we do recognise the key role that sports facilities can play in shaping and invigorating communities. Sport England is helping local authorities to plan strategically, so that we have the right facilities in the right places to benefit the whole community.

Graham Allen: My hon. Friend the Minister knows that I will continue to press him gently but persistently on the point that, although we are all very proud that the Olympic games are coming to the UK, sport has a fantastic role to play in regenerating our local communities. I hope that he has had a chance to read the document that I sent him from Sport Nottingham—part of the One Nottingham partnership's effort—which is designed to get young people actively involved in our communities through all the things that sport can teach them about leadership, teamwork and so on. Yes, we all applaud the Olympics, but, equally, will he ensure that our efforts on community regeneration through sport continue unabated?

Gerry Sutcliffe: I congratulate my hon. Friend, who chairs One Nottingham, on the way in which it has examined the strategic position of sport in its community—that is what we want to see. Sport can provide benefits, be it in health and education, or in reducing offending. It is important that everyone benefits from the London 2012 Olympics. We need to work with Sport England and local communities to ensure that sport and world-class facilities are available to everyone, in all our communities.

Topical Questions

Simon Hughes: If he will make a statement on his departmental responsibilities.

Andy Burnham: Last week, the four-year digital switchover process began smoothly in the Border region. A range of organisations have worked well together to make that possible, particularly the local organisations, including the Scottish Borders council and The Bridge community organisation, and the hon. Member for Berwickshire, Roxburgh and Selkirk (Mr. Moore). I am sure that the whole House will want to join me in passing on our thanks to them. Tomorrow, VisitBritain will publish Deloitte's report on the contribution of tourism to the economy.

Simon Hughes: I thank the Secretary of State for his response. He will be aware that one of the big concerns the length of the country is the pocket money pricing of alcohol in respect of off-sales from supermarkets and other such places. Given that today's Select Committee on Home Affairs report on policing contained a specific recommendation to his Department and that the "Tackling Booze Britain" report by my Liberal colleagues asks that there be a minimum price for alcohol sales, and negotiation with the EU, if necessary, can he give an undertaking that this issue will be addressed by his Department, so that we can stop vodka, other spirits and beers being bought for cheaper than almost everything else that is available in many of our supermarkets?

Andy Burnham: I certainly recognise the importance of the issues that the hon. Gentleman has raised. He will know that the Government have in hand a review of alcohol price, promotion and harm. I have not yet had a chance to study all the Committee's report, but I have had a look at the sections that relate to my Department. I believe that the Committee's Chair was on the radio this morning saying that he did not see evidence that the Licensing Act 2003 had contributed to fuelling alcohol-related violence, although the Committee did say that it did not believe that the full powers of the Act were being used properly to target and clamp down on problem areas. We recognise that conclusion; indeed, we have said a similar thing ourselves. We will study the Committee's report carefully, but I can say that I agree with that central recommendation.

Hugh Bayley: York's designation as an area of archaeological importance protects the unique and irreplaceable archaeological remains below the city's streets from being dug up by public utility companies. The York-based Council for British Archaeology and the York Archaeological Trust are worried that the designation could be changed in the new heritage Bill. Will the Minister be willing to meet me, and archaeologists from York, to discuss our concerns?

Barbara Follett: I would be extremely happy to meet my hon. Friend; in fact, I have a date in my diary for 15 December.

Andrew Robathan: Are we all invited?Before I go back to reading the Secretary of State's excellent speeches, may I ask him whether he heard a senior BBC executive say that younger people felt that the swearing, foul language and appalling behaviour of Russell Brand and Jonathan Ross was acceptable? Is this not the point: younger people have heard a lot of swearing and seen appalling behaviour on the TV—and heard it on the radio—so believe that such things are acceptable? They reflect the language and whatever they see on the BBC and on other things. Is this not another example of the rarefied behaviour of BBC executives, which leads them to paying Jonathan Ross £6 million a year of the money that comes from every member of the public walking the streets?

Andy Burnham: I do not recall the comments to which the hon. Gentleman referred. If he wants to send them to me, I will read them carefully. I refer him to the points I made earlier about the review of the BBC's editorial guidelines. It is crucial that those guidelines reflect majority opinion in the country about what it is and is not acceptable to broadcast. I share his concerns about the excessive use of bad language on television. It is important that broadcasters listen to public concern about those issues and ensure that what they broadcast on our screens is acceptable, high-quality entertainment without resorting to cheap headlines or ways of generating cheap publicity.

Rob Marris: In spring last year, Sporting Equals was directed by the Government to produce—as a priority—policy guidance on the issue of racial abuse in sport. That guidance is 14 months overdue, with two missed deadlines, and now no production date has been set at all. Why is the publication of that guidance so lamentably delayed? Is racial abuse in sport sadly no longer a priority for the Government?

Gerry Sutcliffe: Clearly, any form of racism in sport is unacceptable. I apologise to my hon. Friend for the time that it has taken for Sport England and Sporting Equals to come up with those guidelines. I will ensure that they respond more quickly than the deadline that he has set, because I believe that it is important that this House ensures that we do not accept racism of any form in sport.

Jeremy Hunt: Will the Secretary of State confirm rumours that the heritage protection Bill has been dropped from the Queen's Speech? If that is the case, is that not the final nail in the coffin for the Government's heritage policies? We have seen lottery money plundered, the Government telling churches to turn themselves into cafés and gyms and now the denial of the vital parliamentary time that would allow the heritage sector better to look after the heritage that belongs to us all. When can we have a positive vision for our heritage sector? Is it condemned to yet more years of neglect and decline?

Andy Burnham: I do not accept the hon. Gentleman's criticism. In the recent spending round, English Heritage received an increase in funding. We have worked with all parties in the heritage sector to introduce the first heritage protection Bill for 30 years. That is clear evidence of the Government's commitment to the sector. The hon. Gentleman knows that I cannot comment on the Queen's Speech in advance of its publication. However, he will know that the Planning Bill will require us to bring forward a new planning policy statement on the built heritage, replacing planning policy guidance 15 and 16. We will do so shortly, and we will issue that statement for consultation. We recognise the importance of the built heritage and we are taking active steps to protect it.

Nia Griffith: What talks has my right hon. Friend the Secretary of State had with Treasury colleagues about the "Subs for Clubs" campaign to extend gift aid to cover junior member subscription fees? That would greatly help clubs such as Llangennech rugby football club in my constituency, which does outstanding work with young people.

Gerry Sutcliffe: We continue to talk with the Treasury and others to ensure that we try to maximise the advantage to clubs of the CASC—Community Amateur Sports Clubs—scheme. It is an important scheme that delivers on the ground and we want to encourage more clubs to take part. We are continually discussing ways of trying to support local clubs. Llanelli is a well-known club in Wales, and it was sad to see the team leave its old ground after the game on Friday. We will work hard to make sure we support amateur clubs.

Mark Pritchard: Some time ago, the former Secretary of State gave a commitment that the Lilleshall national sports academy, in my constituency, would become a regional training facility for the 2012 Olympics. Will the Minister confirm that that is the case? What is the timetable for bringing that facility on stream?

Gerry Sutcliffe: There are a number of training facilities across the country and we have supported their bids to be training camps for 2012. It is now up to the countries that want to come to those training camps to put bids in, and we will support Lilleshall in the same way as anywhere else.

John Grogan: Do Ministers see merit in changing the taxation system for the national lottery and introducing a gross profit tax, such as that used in other gambling sectors, in order to increase turnover and the amount of money that is available for good causes?

Andy Burnham: There is merit in that argument, but there are also potential downsides. It is important that the public have confidence in the tax arrangements relating to the national lottery and we keep these matters under active consideration.

Bob Spink: Does the Minister accept that swimming is an important skill, especially in an island, or a seaside community such as Castle Point, so will he give us a progress report on the free swimming initiative?

Gerry Sutcliffe: I am happy to report that more than 80 per cent. of local authorities support the free swimming initiative for the over-60s and the aspirations for the under-16s. I am concerned, however, that a number of local authorities are playing politics with the issue by not investing their own money in supporting free swimming. It is important that people see the issue for what it is: it came from local government, and many local authorities funded it from their own resources. The Government supported the scheme and have put money on the table, but we are being thwarted by a number of authorities that would rather play politics than deliver free swimming for their constituents.

John Robertson: My hon. Friend the Minister will be aware that Insight radio, in Partick in Glasgow, for partially sighted and blind people, is doing a great job and is about to roll out across the country. Will she consider having that excellent radio station put on Freeview, which is after all paid for by licence holders, so that blind and partially sighted people throughout the country have better access to the radio station?

Barbara Follett: I am happy to meet my hon. Friend to try to resolve the situation with him.

Kerry McCarthy: Does my right hon. Friend agree that it is hard to imagine circumstances in which it would be appropriate or acceptable for a child to find out who their father is by means of a DNA test result revealed on daytime TV? Is he aware of my forthcoming ten-minute Bill, which aims to encourage broadcasters to act more responsibly in that and other matters involving children?

Andy Burnham: I did not see the programme, although I am aware of the concerns that my hon. Friend has raised. In principle, it is completely unacceptable for that to happen. In the live debate we are having about broadcasting standards, my hon. Friend is right to raise her concerns and as I said about other issues we have discussed, there should be no repeat of those circumstances and processes should be strengthened to ensure that is the case.

OLYMPICS

The Minister for the Olympics was asked—

Expenditure

David Heathcoat-Amory: What her most recent estimate is of the cost to the public purse of hosting the London 2012 Olympic games; and if she will make a statement.

David Davies: What her most recent estimate is of the cost to the public purse of hosting the London 2012 Olympic Games; and if she will make a statement.

Tessa Jowell: The estimate of public expenditure on the London 2012 Olympic games remains within the £9.325 billion package that I announced in March 2007. I provided further details of the budget in my statement of December 2007 and in my six-month progress updates of January and July 2008. The next progress report, setting out the budgetary changes in detail, will be in January 2009. After that, as part of my commitment to transparency—making the details of the budget as widely available as possible—I shall move from providing financial updates on a six-monthly to a three-monthly basis.

David Heathcoat-Amory: That £9.3 billion estimate is an increase from the figure of £4 billion originally given to the House, which is an appalling overspend even by the lax standards of this Government. Will the Minister assure the House that the present economic recession will not add further to the public cost, either to the taxpayer, the council tax payer or indeed the national lottery, which has already been raided for the Olympics? Will she give an undertaking that the £9.3 billion estimate will be a full and final figure within which the Olympics must live?

Tessa Jowell: Given that the figure of £9.325 billion includes a contingency of £2.7 billion not included in the original figure, I have made it absolutely clear to all the many stakeholders in the Olympics that £9.325 billion is the absolute limit of public money, whether it comes from the lottery, the London council tax payer or the Exchequer.

David Davies: Given the extraordinarily large salaries being paid to the organisers of the Olympic games for what is, after all, meant to be an amateur contest, does the Minister agree that it might concentrate their minds a little if they were told that any further increase that impacts on the taxpayer at all—whether directly or indirectly—should be matched by the same percentage decrease in the salaries that they receive?

Tessa Jowell: First, I should like to make it absolutely clear that people of world-class experience and stature are working on the project. That is why all the major projects in the construction programme are already on budget and on time. The hon. Gentleman proposes his various flamboyant— [ Interruption ] imaginative—ideas on how costs will be controlled. The fact that we have such high-calibre people running the construction of the Olympic park means that we have made very good progress.

Joan Ryan: What recent discussions has my right hon. Friend had with local authorities, such as mine in Enfield, to ensure that they are doing all that they can to use the Olympics to encourage sport at grass-roots level? She will know that my local authority has a very poor record on sports and leisure provision and was recently dumping rubbish in our athletics stadium, so I am very concerned to know that we are putting pressure on them to ensure that our young people in Enfield get the benefit of the Olympic games.

Tessa Jowell: My right hon. Friend is absolutely right, and I pay tribute to the work that she has done with constituents to ensure that they derive full benefit from the London 2012 games. She is absolutely right to point to the variation in the initiative and imagination shown by local authorities, not just in London but across the country. There are many incentives: the opportunity to host training camps and to maximise the number of local volunteers. The opportunity is part of the economic development strategy to bid for contracts. Of course, there is the opportunity to win the right to show the Inspire mark, which is a symbol of excellence in achievement by organisations, clubs and individuals around the country. Yes, local authorities have got an absolutely key role to play in ensuring that these are the UK's games in London and that every community has the opportunity to become involved and to show the kind of leadership that she has shown in making that happen.

Frank Field: May I ask the Minister to keep her beady eye on who is getting the jobs from this record public expenditure? Is she aware from the latest figures for new national insurance numbers that, in Newham alone last year, 20,000-plus national insurance numbers were issued to non-British workers? Will she hold discussions with the contractors to ensure that local people get a far better share of the new jobs than they are getting currently?

Tessa Jowell: I am grateful to my right hon. Friend and hope that he will continue to press this issue, on which a clear commitment has been shown by the Olympic Delivery Authority. Of the people now working on the construction of the Olympic park, 25 per cent. are from the local Olympic boroughs and 10 per cent. were previously unemployed. The ODA has commissioned a tracking study to ensure that the people who have been counted as local really are local, rather than transient. I thank him for his vigilance and very much hope that we can live up to his very high expectations.

Hugh Robertson: I am sure that hon. Members on both sides of the House will welcome the assurances that the Minister has just given to my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), but can I tempt her to go a little further? Surely, given the current economic situation, which was not predicted at the time of the March 2007 budget announcement, a number of the costs contained in that budget must have fallen, while others have risen. Does she agree, and when does she anticipate being able to amortise them?

Tessa Jowell: Yes, I agree, and those figures will be published, as soon as they are ready and robust, at the time of the January publication of the quarterly report.

David Taylor: Parts of the costing equation still seem rather vague, not least the £1 billion for the athletes village and the £400 million for the broadcasting and media centre. Will my right hon. Friend tell me whether the formula, under which it was anticipated that £650 million would come from the private sector to underpin running costs, will deliver that sum? Seven tier 1 sponsors have been recruited, which is good news; that is £350 million. However, in this economically pressed time, will we get the other £300 million from smaller firms?

Tessa Jowell: Let me separate out two elements from my hon. Friend's question. First, as he will know, the private-sector contribution to the construction of both the Olympic village and the press and broadcast centre is subject to renegotiation in the light of the economic downturn and the reduction in the equity and contingent borrowing available. Again, it is important that the House understands the Olympic village's investment in new homes for the people of east London. Decisions will be taken about the scale on which the press and broadcast centre will be built, depending on the certainty of legacy.
	The second part of his question was, I think, essentially about the amount of sponsorship raised by the London Organising Committee of the Olympic Games and Paralympic Games. I can assure him that it is on target to meet its sponsorship goals. It has already raised more money at this stage than any previous Olympic city. However, it would be ridiculous to pretend that the economic climate is as easy and susceptible as it was when we made the bid. In these circumstances, LOCOG is doing an extraordinarily good job of raising money.

Tom Brake: Will the Minister confirm that if the cost to the public purse soars to such an extent that Olympic projects are put at risk, Ministers will prioritise critical infrastructure investment projects, such as the £91-million north London line proposals, rather than spending money on a massive media centre, more £40-million contracts for management consultants, or adding to the 1,000 members of staff already working on the Olympics?

Tessa Jowell: I am afraid that that is a rather half-baked Liberal Democrat analysis of the accounts. Expertise was brought in for the Olympics early on. That is why we are on budget and, so far, on time for all aspects of the development. Without going into the rest of the rather cheap and unsubstantiated points that he makes, I can absolutely confirm that legacy is the basis on which long-term investment decisions about the Olympics will be made. Before we make a major commitment of money, we want to be absolutely convinced that there is a legacy to be realised. Those decisions and judgments will shape the conclusions about the nature of the broadcasting centre that is to be constructed; construction is due to begin next spring.

Commonwealth Games

Jo Swinson: If she will ensure that the preparations for the London 2012 Olympics complement preparations for the Glasgow 2014 Commonwealth games.

Tessa Jowell: Hosting the Olympic and Paralympic games in London in 2012, and the Commonwealth games in Glasgow in 2014, presents a unique opportunity to realise sporting, business and cultural benefits for the whole of Scotland. Ministers and officials are in regular contact on preparations for both London 2012 and Glasgow 2014. As my right hon. Friend the Secretary of State for Culture, Media and Sport would agree, both events are regularly discussed at meetings of the Sports Cabinet. Officials have shared experience of various issues, including Government guarantees, legislation, advertising controls and ticket-touting.

Jo Swinson: The UK is fortunate to be hosting two great international sporting events within the space of two years, but it is vital that Glasgow in 2014 is not seen as an afterthought. What further steps will the Minister take to improve joint working, and particularly to ensure that companies can benefit from the experience of working on both events? With Scottish companies so far winning only 2 per cent. of the contracts for 2012, despite making up 7 per cent. of UK businesses, the signs are not promising.

Tessa Jowell: . A real drive from the Scottish Executive to maximise the benefits to Scotland of the contracts, for instance, would be one way forward, as would accepting my right hon. and hon. Friends' invitations to meet Scottish Executive Ministers regularly to provide support and know-how in hosting the 2014 games. Sadly, however, it seems that the Scottish Executive have declined the offers of help that have been extended to them.

Point of Order

Greg Mulholland: On a point of order, Mr. Speaker. While I accept that we are all fallible in terms of the potential to leave on our mobile phones, may I recommend to the House a scheme in operation at Leeds city council, whereby the lord mayor of Leeds fines a council member when his or her phone rings? May I suggest that you, Mr. Speaker, consider a suitable charity and introduce a similar scheme in this House?

Mr. Speaker: I have no powers to fine hon. Gentlemen—or hon. Ladies, for that matter.

Opposition Day
	 — 
	[20th Allotted Day]

Economic Crisis

Mr. Speaker: I inform the House that, in both debates, I have selected the amendments in the name of the Prime Minister.

Vincent Cable: I beg to move,
	That this House is concerned at the increasing difficulties caused by the current economic crisis to many British citizens in maintaining their homes, paying their bills and providing for themselves and their families; believes that these problems originated not just in the global financial system but in unsustainable levels of personal borrowing and house prices which were overlooked by Government policy; is alarmed at the steep rise in mortgage arrears and repossession orders; regrets that, despite receiving £500 billion of taxpayers' money, the banking industry has failed to respond adequately to the needs of its customers or modify sufficiently its behaviour in respect of mortgage interest rates, new lending to struggling small businesses and its bonus culture; notes that the Bank of England has implemented the 2 per cent. cut in interest rates which the Liberal Democrats called for and urges it to make further cuts if the economy deteriorates further; and calls on the Government to introduce an immediate substantial cut in income tax to benefit low income and standard rate taxpayers, paid for by wealthy individuals who profited disproportionately from the economic boom and who do not pay their fair share of tax.
	Having checked that I have switched off my mobile phone, it is a pleasure to introduce an Opposition day motion that stands in my name and in those of my colleagues. Our purpose in bringing it to the House is to give Members an opportunity to review the rapidly deteriorating economic situation and to air some ideas and options about how it might be dealt with in the run-up to the pre-Budget report.
	We have noticed a pattern developing in the past few weeks whereby we come up with ideas and, whether they are on housing repossessions, interest rates or tax cuts, within a few days or even weeks, they are rapidly followed by the Conservatives, the Government, or both. We might almost say that the road to Damascus is becoming severely congested as they queue up to adopt our policies in different respects. Unfortunately, some Government Front Benchers do not convert quickly enough, and as a result, they leave themselves feeling somewhat embarrassed.
	I am glad that the Exchequer Secretary has been brave enough to come back to the House after the previous such Opposition day debate, because she may already realise that her comments on that occasion have become the stuff of radio and television comedy shows. I shall quote one of her more memorable observations during that debate:
	"The Liberal Democrat motion has been much commented on, possibly because it reads like the storyboard for "Apocalypse Now", or perhaps even "Bleak House". According to the motion, we are facing...the 'risk of recession'...Fortunately for all of us, however, that colourful and lurid fiction has no real bearing on the macro-economic reality."
	It is only fair that we do not isolate the Exchequer Secretary too much, however, because Labour Back Benchers faithfully echoed everything that she said. I do not want to criticise a gentleman in his absence, but I am sure that he will not mind my quoting what he said. He is one of the more distinguished— [ Interruption. ] Indeed, he is here now. The hon. Member for Leeds, East (Mr. Mudie), who is a very distinguished and respected member of the Select Committee on the Treasury, said on that occasion:
	"I do not see how anyone can table a motion that suggests that we are nearing a recession".—[ Official Report, 2 April 2008; Vol. 474, c. 824-5, 810.]
	Well, things do change in a six-month period.
	It is not just Government Members, however; the habit has spread. The Conservative shadow Chancellor is not present, but I remember that when I last spoke about economic matters, he intervened to rebuke me for irresponsible behaviour in respect of interest rates. On 14 October, he said:
	"By the way, I do not think that it is particularly sensible either for politicians speaking from the Front Bench to call on the Bank to cut or increase interest rates. Indeed, I make it a practice not to comment on them."—[ Official Report, 14 October 2008; Vol. 480, c. 708.]
	Well, I followed the hon. Gentleman last week around the television studios, where he claimed credit for having anticipated the cut in interest rates. Indeed, there was some mysterious process of intellectual osmosis by which the idea had communicated itself to the Monetary Policy Committee of the Bank of England, and for which he wanted to claim full credit.
	Without indulging too much in anecdote, however, I think that it would be useful to record some of the facts of the current economic situation. Those of us who talk to local business groups know that the position is really dire and will feed through to statistics in the coming months, but let us stick initially to the facts. The Government's own figures recorded a decline in output in the third quarter, and that represents a fall over the year. The International Monetary Fund predicts a stagnation of growth this year and a decline of 1.3 per cent. next year, which it believes is the deepest cut in any major western country.
	We talked at length about the housing market in our last Opposition day debate. The main market indicator suggests that there has been a 15 per cent. fall from the peak at the end of October last year and that house prices at auctions have now fallen by 30 per cent. since last year. It is worth contrasting that with what the former Financial Secretary to the Treasury told us when we debated this subject a few months ago:
	"House price inflation is declining, but it is doing so relatively gradually, and house prices remain higher than they were a year ago."—[ Official Report, 2 April 2008; Vol. 474, c. 803.]
	The Government told us that repossessions were not a problem, but they have doubled since the first quarter of 2007; at the end of October this year, they were 71 per cent. up on the year before. The latest figures suggest that there were more than 4,000 insolvencies in the third quarter of 2008—a 26 per cent. increase on the corresponding quarter the previous year. The unemployment rate is, mercifully, much lower than during the last recession, but at 5.7 per cent. on the international measure it is up worryingly, although we hope that it will not reach those alarming levels of the early 1990s.
	Those are the facts, although we will no doubt argue endlessly about the causes. A reasonably fair-minded view is that the problems and the depth of the recession that we now face are partly due to domestic policy failures and partly due to international factors beyond our control. As far as domestic policy failures are concerned, it is reasonable to point out the growing consensus that there was an excessive build-up of personal household credit linked to the boom in the housing market. We warned about that for the first time back in October 2003. Others, including the IMF and the Governor of the Bank of England, also issued warnings; even Conservative Front Benchers eventually spotted that there was a problem—the shadow Chancellor referred to it for the first time in January 2007. Clearly, there is now an acceptance that that major UK problem was domestically generated.
	There has also been an international banking crisis, for which obviously the Government are not responsible, at least directly. We should not be too complacent about that, however, because much of the shadow banking industry that originally grew up on the back of sub-prime lending activity originated or developed in the City. Until very recently, there was extraordinary hubris and complacency about the workings of financial markets in the City. A few months ago, the Minister's predecessors were talking to us in loving terms about how the City operated, a bit like little boys who had just discovered an unexploded bomb and thought that it was a shiny new toy. The Minister's predecessors now realise that many of the activities that were taking place were dangerous.

Andrew Pelling: It is a great pleasure to intervene on a Member who will single-handedly save so many seats for the Liberal Democrats. Is not the issue about seeing the solutions rather than trying to place blame for what happened in the past? The hon. Gentleman has detailed the damage done to the banks. Does he agree that, following the rescue of the banks, one of the solutions is to repair them, take the bad debts off their balance sheets and create a bad bank solution, as has been done successfully in Sweden, and is now also being attempted in Switzerland?

Vincent Cable: That is a helpful prompt; I was about to move on to the positive suggestions, and the hon. Gentleman is right to say that we should spend our time and energy on them. He has anticipated one of the points that I was going to make: the British bank rescue plan—the recapitalisation—was right, necessary and appropriate, but it is only one half of the solution, and there is the other half to deal with.
	In talking about where we move from here, we should start with the bank rescue proposal, as the hon. Gentleman suggested. We supported that; it was right and timely. However, we now know a little more about what is going on and can ask more critical questions about how the process is developing.
	One of the key questions concerns the nature of the commitments that were entered into between the Treasury and the banks when the recapitalisation programme and insurance of inter-bank lending were entered into. On one of the key commitments, we have debated several times the precise meaning of the statement that
	"the Government has agreed with the banks"
	on
	"maintaining...the availability and active market of competitively priced lending to homeowners and small business at 2007 levels".
	It becomes more important that we establish exactly what that commitment meant and what was understood about what would happen.
	Let me put a series of specific questions to the Government. Are they or anybody else actually monitoring the amount of business lending, in particular, that is taking place? Are they monitoring on a weekly or monthly basis how much credit is going from each individual bank into the business sector? I hear anecdotes—I cannot prove this—that several of the banks have instructed their managers to cut credit and are incentivising them to do so. One way of proving or disproving that point would be to have evidence, and I hope that the Government are monitoring it very carefully. Do they have any mechanism for telling us what is happening as regards the flow of funds?
	What instructions have been given to the Government directors? Do we know who they are? What were their letters of appointment? What have they been told to do? They appear to have a very simple mandate, which is not to interfere, but that is clearly creating a problem in itself.

John Redwood: Does the hon. Gentleman accept that the Government are saying two contradictory things to the banks? Through their regulator they are saying that the banks have to improve their ratios, which means cutting their loans as well as increasing their capital, and through their guidance they are saying that the banks need to increase their loans, which would worsen their ratios?

Vincent Cable: The instructions are indeed contradictory, and we need more clarity. In fact, they are not the only instructions that the banks are being given. As of the other day, we understand that the Government have now told the banks to pass on interest rate cuts—a third objective. Again, we need to understand the implications. The banks tell us that they are making a loss by doing that; I do not know whether that is true, but we need to understand precisely what the banks are being instructed to do and in what circumstances.

Susan Kramer: I have checked on the internet with several banks today, and rate cuts are certainly being passed on to savers. For example, a product that was available with 6.9 per cent. interest two weeks ago is now down to 5.7 per cent., which seems to be the best deal available. Does he agree that that does not seem to be matched by the offers being made to mortgage holders?

Vincent Cable: Indeed. The banks are simply widening their spread. That is their objective, as the right hon. Member for Wokingham (Mr. Redwood) suggested. The Government appear not to have thought through the implications of the agreement that they reached.
	What precisely was the understanding on bonus arrangements, which have been criticised in all parts of the House? Quite lavish bonus arrangements have been proposed by Lloyds TSB, which is one of the beneficiaries of the process. Mr. Hornby, who on any conceivable measure could be described as a business failure, is now being very lavishly rewarded by his new employer, Lloyds TSB. How is it possible that the Government reached a very specific agreement with the banks on bonuses only to have them completely disregard it?
	Let me make various suggestions on the banking programme before we move on. First, it is clear, as we have heard in the previous two interventions, that merely telling the banks that the Government are going to operate on an arm's length basis is causing confusion. The rational response of the banks is to build up their reserves to get the Government off their backs as quickly as possible so that they can pay dividends and bonuses. The Government's ambition appears largely to be limited to getting the taxpayers' money back as quickly as possible. While those objectives seem rational in themselves, pursued in isolation they potentially have devastatingly negative consequences. If the economy goes into a downward spiral and business credit is cut off, that further increases bad loans, which increase the amount of the recapitalisation that will have to take place. Can the Government be absolutely clear about whether they are going to intervene to give the banks more specific instructions?
	Secondly, can the Government tell us why they are now proceeding, in terms of their approvals, with the Lloyds TSB-HBOS merger? There may well be good commercial and public policy reasons for that, but I think that they are assuming that because it made sense six weeks ago in order to rescue HBOS from collapse, it still makes sense today. There are growing numbers of authoritative people in the banking system who say that it does not make sense. They want to have the options re-examined and they want alternative bids to be looked at properly. Along with Tavish Scott MSP, I have written seeking an appointment with Mr. Hornby and Lord Stevenson to explain why they are not willing to reopen matters on the part of HBOS. There is also a question for the Government, however. Will Ministers explain why they are allowing matters to proceed? The deal may well be beneficial to Lloyds TSB, but why is it in the national interest?
	Finally on the banking system, what the Government did in broad terms made sense in the context in which they introduced it, but a whole set of other problems are now coming over the horizon that have not yet been discussed. When will the Government discuss them? One of them was raised from the Back Benches a few moments ago: we have had half the policy. The Swedish model had a combination of elements, one of which was recapitalisation, and another concerned the "bad bank"—the Paulson-type plan, and the Americans have had the other half of the programme, but are the Government going to bring both halves together, and how will they do so? Are they thinking ahead to how the new banking system will operate?
	We are discussing at the moment a Banking Bill that is valid in many respects, but is limited in what it covers. It does not explain how the banking system, once it has emerged from its massive heart attack, will lead a different kind of lifestyle. One thing that cannot continue is the ambiguous relationship in which banks have what Cruickshank called eight years ago "regulatory privileges"—they depend on being bailed out, in other words—while they continue to operate on the maximisation of shareholder value. That contradiction cannot continue, and the Government need at an early stage to give ideas as to how they will deal with that problem.
	My second point about forward-looking policy concerns housing, which is the sector that has been most damaged. We encouraged the Government to pursue an idea that they had some months ago of buying up empty property and land, which is now available at heavily discounted prices, so that registered social landlords can increase the availability of social housing, thereby providing an injection into the building industry. Although the Government are talking the right language, the feedback that I have received suggests that absolutely nothing is happening. It appears that approval was given for £8 billion of investment in social housing, but that the money is not reaching the social landlords. There are problems with the Treasury funding arrangements and the rental arrangements that operate under Treasury rules, which are preventing progress from being made with the programme. Will the Government tell us how much of the social housing package has reached the social landlords, and how many houses they propose to proceed with in the context of the emergency to which we are told that they are reacting?
	On repossessions, 10 days ago, at Prime Minister's questions, the Prime Minister told us that the Government have proceeded with fresh instructions to the courts on how to handle repossession cases. We had been urging that, and we welcomed it at the time. The feedback I have received suggests that no instructions have yet been given, or if they have been, they are very discreet. No one is aware of any change in practice being communicated to the courts that process such matters. Moreover, there is an extremely alarming story in the  Financial Times today, which says that banks and building societies whose clients are in arrears for a few weeks can proceed to repossession without going to the courts; they simply issue an instruction to the bailiffs to repossess after a few months' arrears. The Government need to tell us how, through legislative or other action, they will prevent a cascade of repossessions from proceeding through the winter, as growing numbers of people find that they are on short-time working hours, losing overtime or losing their jobs, and simply cannot afford their payments.
	Thirdly, we had a debate on small business a week or so ago, which my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) introduced. I do not want to go into further detail on the measures involved, but how will the Government develop the helpful ideas they have already set out for accelerating payments to small businesses that are involved in Government contracts? Will that extend to the vast numbers of quangos that operate under Government scrutiny? Will it be used for companies that are subject to Government procurement? The 10-day payment—the accelerated payment—is a good principle, but how far will the Government spread it? How far has the programme already gone?

Bob Spink: Will the hon. Gentleman extend his advice to the Government by asking them to ask Her Majesty's Revenue and Customs to take a more sympathetic and reasonable attitude to those who owe the Government money in back taxes, and to agree more achievable repayment systems and schemes?

Vincent Cable: Indeed, the Government could take a variety of steps, and the hon. Gentleman suggests one. The small Government loan guarantee scheme has not been updated to take account of current realities. Given the strength of the Government's balance sheet relative to the private sector, the Government could do a variety of things to help. They have made several helpful gestures, but they could go much further.
	Let me consider the issue of the day—tax cuts. I approach the matter with caution, given that the Conservatives and the Government seem desperately anxious to run on to the ground that we staked out. Our approach was that there should be tax cuts for people on middle and low incomes, for which people who are relatively wealthy would pay. We argued that primarily on the ground of fairness. At the time, there was no major economic crisis, but the proposal now happens to be appropriate to the context in which we operate.
	Clearly, people on low incomes have a higher propensity to spend than those on high incomes, who are very wealthy. Our proposal, which the new President elect of the United States echoed at least generally, seems highly relevant. We have advocated a programme whereby income tax should be cut for people on low incomes, either by raising thresholds or cutting the basic rate by the equivalent of 4p in the pound. We are therefore considering an amount of approximately £1,000 for a £30,000 income tax payer. The proposal would be funded in a variety of ways, which we have set out, one of which involves tackling potential tax avoidance and the existing concessionary rates that people pay on capital gains tax. We were impressed with the sensible way in which Lady Thatcher and Lord Lawson devised the capital gains tax rules, and we would like to revert to that, with potentially major Revenue implications.
	We believe that people who contribute to large pension pots should be incentivised, but that larger incentives should not be given to people who make small savings—we believe in closing that loophole. We also believe in a much tougher approach to tax havens. Again, the President elect of the United States wanted to go down that road. Specific measures, such as dealing with leading corporations' evasion of stamp duty, which the Government should have tackled long ago, are blatantly obvious. A series of measures could, if implemented, enable us to make a substantial cut in income tax for people on low and middle incomes.

Kenneth Clarke: Does the hon. Gentleman agree that, when the proposal was made, it was not intended to be a fiscal stimulus? Indeed, it would not be a fiscal stimulus, because he is describing how revenue would be raised to pay for it. Given that there may be a case for some temporary fiscal stimulus in the not-too-distant future, does not it make more sense to consider a temporary reduction in value added tax, which would relate directly to consumer demand? It seems likely that we will need to stimulate consumer demand in the new year.

Vincent Cable: The measures that I have described would be stimulating for the reasons that I gave: people on low incomes are more likely to spend. The right hon. and learned Gentleman's proposal could have the same effect, but it depends on how it is funded. That gets to the heart of what I am sure that Conservative Members will tell us in the next day or so. As I understand it, the Conservative party proposes funding the VAT cut through parallel cuts in Government spending. Although there may be a case for cutting Government spending generally, in the context that we are considering, the proposal would simply offset a stimulus with a reduction in spending. The right hon. and learned Gentleman must deal with the same problem that the Government have and that we have tried to tackle.
	If there is to be a tax cut, it should operate under three simple principles. First, it must be substantial; a nominal cut has no effect in such circumstances. The package that I have described would cost something in the order of £16 billion. That is a large sum, but as a share of GDP it is not enormous and is certainly affordable within the parameters that I have described. The second principle is that a cut should be fair and equitable, which was where we started from. The third principle is that a cut should be funded. There are dangers in doing what I believe the Government propose, which is to have an unfunded tax cut, which I understand would be financed by Government borrowing. However, Government borrowing ultimately has to be paid for—it is deferred taxation or inflation, and that is not a satisfactory way forward either.
	We need a stimulus that will be funded and is seen to be fair, but which also makes sense in the context of the need to inject demand from people on low incomes, whose income standards are being squeezed. With that, Mr. Speaker, I thank you for the opportunity to introduce the motion and look forward to hearing the reactions to it.

Angela Eagle: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"notes that the Government's actions mean that the economy is entering a period of global downturn with unemployment, inflation and interest rates all much lower than in previous slowdowns, and with debt reduced from 43 per cent. of gross domestic product in 1997 to below 36 per cent. last year; welcomes the extra investment in public services and public servants that this has enabled to compensate for historical underinvestment both in infrastructure and services in every region; supports the Government's global leadership and action to tackle both the causes and effects of the financial and economic turmoil on an international level; welcomes the Government's timely support to protect financial stability and consequently depositors, business and the wider economy; further notes that as a condition of this support the Government has demanded support in turn for homeowners and small and medium size businesses; further notes the action that has been taken in the court system and through mortgage interest support to enable people to stay in their homes, and the provision of £360 million to help small and medium size businesses under the Train to Gain initiative; and further notes that Government action to support families, individuals and businesses across the UK through the tougher times ahead includes extra tax credits, cutting income tax, freezing fuel duty, further winter fuel payments and increases in Child Benefit."
	Let me start by saying that the Government share the concerns of the whole House about the effects of the global economic crisis on British families and business. Over the past few months, newspaper headlines have been dominated by the dramatic events in the international banking sector. However, all of us know only too well that behind every headline there are real people facing worries about staying in their jobs or homes, keeping their businesses afloat or paying their bills every month. The Government have already shown that they are determined to be on their side in the tough times ahead and we are determined to do more to help as the situation unfolds.
	Although the recessions that we endured in the '80s and '90s were essentially domestic in origin, this one is fundamentally different. It is undoubtedly caused by global events originating outside our borders. This recession began in the sub-prime mortgage market in America and spread across the world, mostly because of irresponsible behaviour by banks. The twin shocks of the credit crunch and the surge in energy and food prices have hit every country in the world. As one of the most open trading economies in the world, the UK has not been immune to the effects of those shocks. Although the crisis is global in origin, we recognise that its effects are local.
	The credit crunch presents us with a once-in-a-generation economic challenge. To meet that challenge, we must first stabilise the global banking system to deal with the legacy of bad debt, which has meant that banks have lost confidence in each other and that global credit markets have seized up.

Christopher Huhne: Given that the credit crunch first became apparent in August 2007, could the Exchequer Secretary explain why Treasury Ministers were so slow to understand the implications that she is now spelling out?

Angela Eagle: I do not think that that is a fair accusation, given that everybody watching the events unfolding has said that the credit crunch is an unprecedented, once-in-a-generation occurrence. Policymakers the world over, including those in business, are scrambling to catch up with circumstances as they change and with the changed world that events have left us with, so I think that the hon. Gentleman is being rather churlish in his analysis. Hindsight is a wonderful thing after sudden changes in realities that have been so stable. It is easy to look at the new realities as they are being created as if, prior to those events, we all had crystal balls and everybody knew what was going to happen. We did not. In such unprecedented circumstances, it is important that policymakers and political leaders such as my right hon. Friend the Prime Minister respond flexibly and quickly, and that is what he has done.

Andrew Pelling: The Minister is absolutely right that one must not look back. The Government acted decisively in rescuing the banks. However, does she think there is merit in dealing with the damage that she has detailed by taking those bad debts off the balance sheets to repair the banks and in using the "bad bank" solution?

Angela Eagle: We believe that the package of recapitalisation, special liquidity and the guarantee of inter-bank lending is a comprehensive package that should deal with the problem. However, we will continue to watch carefully what is going on in the international financial markets, as well as what is going on nationally in our own banks. It is important that we respond appropriately if other facts come to light. At the moment, we believe that we have a comprehensive answer.

Matthew Taylor: Will the Minister confirm that the inter-bank lending guarantee has failed to deliver the intended solution—to bring down LIBOR to the rate that existed before the banking crisis?

Angela Eagle: As of the weekend, the important three-month LIBOR rate had come down from a peak of 6.4 per cent. to 4.4 per cent., which represents good progress. We will continue to monitor those numbers, but that has been a cause of significant relief throughout the financial system.

Bob Spink: rose—

Angela Eagle: I shall give way to the UKIP Member.

Bob Spink: Earlier, the Minister mentioned the level of personal debt, but what was the level of national debt, as a proportion of gross domestic product, as we started to enter this negative cycle? What peak does she expect it to reach during the cycle?

Angela Eagle: The updated economic forecast will be available when the pre-Budget report is presented; it is not my role to start anticipating it today. The hon. Gentleman will get those figures in full at the appropriate time. The Labour Government inherited a debt of 43 per cent. of gross domestic product, which is higher than the present level. It is important to note that point.

John Redwood: As the Government prepare to take on liabilities of £3 trillion from the three big banks in which they are buying shares, will the Minister assure the House that they have checked out the assets and liabilities, and that there will not need to be major write-downs on the loan books after they have bought the shares?

Angela Eagle: It is significant that all national Governments in developed countries have taken action similar to that outlined by my right hon. Friend the Prime Minister when he announced the recapitalisation scheme. That was a result of the unprecedented situation in which the global financial system found itself. I wonder whether the right hon. Gentleman would have done the work that he mentioned while the financial system melted around us, given that that could have caused circumstances as bad as, or worse than, those of the great depression in the 1930s. The people of this country demonstrated through their support that they appreciated my right hon. Friend the Prime Minister's swift and effective action.

Philip Hammond: Will the hon. Lady confirm that, whatever she might think, the Office for National Statistics says that the current deficit is 43.3 per cent. of GDP?

Angela Eagle: The hon. Gentleman will see the fiscal and monetary figures when the pre-Budget report is produced, and people will be able to make their own decisions at that time.

Susan Kramer: Quite a number of statements have suggested that this economic crisis was a thunderbolt out of the blue. The Minister will remember, however, as a member of the Treasury Select Committee, that I visited the United States in January 2006. I cannot remember whether she was on that trip, but others from her party certainly were. Investment bankers made it clear to us that, while all was well that day, there would be a major crisis in the sub-prime housing market 18 months down the road, and that there were black clouds on the horizon. We attempted to pass those messages on to the Treasury, formally and informally—so there were warning signs.

Angela Eagle: It was not my pleasure to be on that trip. I made rather a bad habit of missing the foreign trips taken by the Treasury Committee when I was a member of it, owing to other work pressures. However, I think that one of the lessons to be drawn from the circumstances of an interconnected and globalised world is that the weakest link in the regulatory chain can affect all economies, as the circumstances of the credit crunch have demonstrated in quite a sobering way. That new reality will have to be taken into account as we rebuild and reform international structures.
	Before taking a series of interventions, I was saying that the credit crunch presented us with a once-in-a-generation economic challenge, to which we are rising by stabilising the global banking system. However, we must also re-engineer the global economic system to cope with 21st-century realities, and the reality that the hon. Member for Richmond Park (Susan Kramer) spotted in the sub-prime mortgage market during her trip to America is clearly one of the new realities with which we must deal.

Kelvin Hopkins: May I return my right hon. Friend to the question of the gross national debt? Is it not the case that our gross national debt is still way below that of many other countries, that it is historically low, and that to tighten the fiscal stance at this moment would be economic madness?

Angela Eagle: My hon. Friend makes an appropriate and astute comment. People will be waiting to see which side of the Opposition's schizophrenic approach predominates.
	As I was saying, we must re-engineer the global economic system to cope with 21st-century realities—

Kenneth Clarke: The Minister is obviously about to discuss the global measures that she considers to be the remedy. Does she think that looking at the global economic system will have any effect on the two things that went wrong here? First, an appalling fiscal problem piled up, the scale of which is being debated but which is plainly making us all very cautious about considering how we can afford a fiscal stimulus now. Secondly, a complete regulatory failure took place here. Nothing happened in the American housing market that did not happen in the British housing market. Our own national regulatory system, as designed by the present Prime Minister, completely failed to function, despite all the warnings about a credit bubble that were well in evidence long before the Government turned their mind to it.

Angela Eagle: I think that the right hon. and learned Gentleman is being rather partisan in his caricature of the circumstances. When I say that we have an important job to do in re-engineering the global economic system, that does not mean that we do not have equally important reforms to put in place nationally, or that we do not have equally important reforms to put in place at European Union and G7 level. Those jobs must be done together.
	Another lesson of the new era in which we find ourselves, following the credit crunch and the way in which it is manifesting itself, must be that, given the extent of the present interconnection, our problems cannot be solved simply by examining national circumstances or national regulators. That does not mean that the Financial Services Authority has not recognised that it needs to change and reform. Indeed, a programme of work is already under way to respond to some of the shortcomings that the FSA's chief executive identified. The reforms in the Banking Bill constitute another—but only one—aspect of that. There is much work to be done across the piece, at national and at global level, and all the parts of that work must fit together.
	As trying to run an economic system without credit is rather like trying to run a car engine without oil, restoring some normality to credit markets has been an obvious priority for the Government. A sound banking system is an essential precondition for the long-term health of the economy, so by definition our initial focus has had to be on the banks.
	That is why on 8 October, in consultation with the tripartite authorities, the Government announced comprehensive measures to ensure stability in the financial system. By recapitalising banks, guaranteeing inter-bank lending and extending the special liquidity scheme, the Government are demonstrating their commitment to do whatever is necessary to maintain stability. The fact that this comprehensive plan was followed by similar action around the world shows both the global nature of the challenge confronting us and the leadership given by the UK in responding to it.
	The Prime Minister and the Chancellor are working with other global leaders and our European partners to ensure that the banks are stabilised and begin to lend again, but they are also focusing on reform of the international system to ensure that it can cope with the realities of an interconnected and increasingly interdependent global economic system.

Kelvin Hopkins: I agree very much with my hon. Friend's comments. I wanted to make the following point to the Chancellor when he made his statement some time ago. Given that the Government have now taken big stakes in a number of banks, with some in public ownership and Government representatives on some boards, was it not also important to put in Government officials at the operational level to make sure that banks and those in banking behave appropriately in the public interest?

Angela Eagle: My right hon. Friend the Chancellor has announced the creation of UK financial investments. We are still putting together the approach for those who will sit on boards and the arrangements that will need to be made to make that work. We will, no doubt, in due course have discussions about the details, but my hon. Friend has made his pitch and I will make sure it is looked at.

Rob Marris: May I urge my hon. Friend to resist the siren voices of the Liberal Democrats? While they have a certain track record in one sense, they focus exclusively on the short term. Short-term measures are important, but I urge my hon. Friend to continue, as the Government have, not only with short-term measures but with medium-term measures, which the Opposition are overlooking, such as the new Bretton Woods agreement that we need, increasing house building in the UK to address the problem of undersupply and therefore of over-inflation in house prices; carrying on with training for the skills we will need when the economy picks up again; and carrying on with measures such as changes to the pension system so we do not end up a basket case, which Italy will be in about 10 years' time?

Angela Eagle: I always do my best to avoid siren voices, but my hon. Friend is right to point out that, despite all the diverting and difficult things going on in the immediate term, it is important at times such as these to look through the sound and fury to the medium term, and to ensure that, in the areas my hon. Friend mentions, the Government position this country's economy so it can get through in the best possible shape.
	The scale of the problem caused by the disruption we have all been experiencing in the global financial system is enormous. As the International Monetary Fund said last month, the world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s. As a result of the credit crunch, we have already seen falling output in Germany, France, Italy, Ireland, Japan and Canada, and we now also hear that the USA is in recession. We are now seeing falls in output in the UK, too.
	Two weeks ago, the Bank of England's financial stability report estimated sub-prime and related losses at almost $3 trillion, and it is clear that there can be no return to business as usual in these unprecedented circumstances. The interconnected nature of our financial institutions substantially increases systemic risk if any one financial institution fails. The capacity of private sector institutions to rescue each other has proved to be limited. Governments around the world have therefore acted on an unprecedented scale to support a financial system that has been shaken to its foundations.
	There will be long-term implications for the relationship between Government and the financial sector at both national and international levels. The Chancellor has made it clear that we need to return to the issues of regulation and transparency, and to the design of the international financial architecture, which must be made fit for purpose in a more globally interdependent world. We also need progress on a world trade deal and the rejection of a beggar-thy-neighbour protectionism, which changed the great stock market crash of 1929 into the great depression and the global calamity of the second world war.
	Unlike the Conservatives when they were last in government dealing with a recession, the Labour party in government does not believe that unemployment is a price worth paying; nor does it believe that if it is not hurting, it is not working. We believe it right to stand alongside people and use the power of the state to help them through difficult times, and we are determined to help people and businesses with targeted support. Therefore, at the last Budget we gave a tax cut worth £120 to all 22 million basic-rate taxpayers. We delayed the planned fuel duty increase, at an annual cost of £1 billion. We helped 9 million households by making additional winter fuel payments of £50 for the over-60s and of £100 for the over-80s, on top of current payments. Since the Budget, we have also announced substantial help for people to insulate their homes and reduce their energy bills.
	It is inevitable that the global financial crisis should have some effect on the number of people who have difficulty repaying their mortgages, but the number of repossessions for the whole of 2007 is about a third of the levels of the early 1990s, and data from the Council of Mortgage Lenders show that the number of properties taken into possession in the first half of 2008 equates to 0.16 per cent of all mortgages—less than half the rate seen in the early 1990s. However, we are not complacent, and I recognise that each and every repossession is a tragedy for the people involved.

Christopher Huhne: Will the Minister give way?

Angela Eagle: I have given way to the hon. Gentleman once already, but I shall do so again.

Christopher Huhne: I am very grateful to the Minister for giving way again. As she knows, the level of repossessions took some time to build up in the crisis of the early 1990s. Is she saying that there will be no further increase in the level of repossessions? Given what happened when we debated this matter in April—my hon. Friend the Member for Twickenham (Dr. Cable) has quoted her as saying that there was no possibility of a recession, and that there was scaremongering on the Liberal Democrat Benches—why should we take her at all seriously now, when she was so comprehensively wrong then?

Angela Eagle: I noticed the quote from the hon. Gentleman in April when talking about the hon. Member for Twickenham (Dr. Cable)—that he was one of those gloomy economists who always think that a glass is half empty, rather than half full. I am not going to be gloomy about the UK economy; rather, I will repeat what I was saying when the hon. Member for Eastleigh (Chris Huhne) intervened. We are not complacent. We recognise that each and every repossession is a tragedy for the people involved. I am certainly not going to predict—the Government do not predict—the number of repossessions; the Council of Mortgage Lenders publishes its figures. However, we are determined to do what we can to ensure that we can mitigate the problems that lead people to fall into arrears and face repossession. I will deal in a minute with some of the announcements that we have made to that effect.

Kelvin Hopkins: I thank my hon. Friend for giving way yet again; may I reinforce her point about repossessions? Before the 1997 election, my constituency had the highest level of repossessions in the country, as a result of which I had almost the largest swing to Labour during that election.

Jeremy Browne: It was your own talents.

Kelvin Hopkins: If only! It was entirely due to the catastrophic effect of Conservative policies on my constituents.

Angela Eagle: My hon. Friend is treating us to many pearls of wisdom today, and that was another one.
	In September, we announced a range of new measures to support thousands of vulnerable home owners. Help newly available as a result of these announcements includes a £200 million mortgage rescue scheme that will help up to 6,000 households avoid the trauma of repossession over the next two years. From 1 January, we will reform the help available to home owners who lose their jobs, so that their mortgage interest is paid after 13 weeks, rather than after the 39 weeks that they would previously have had to wait for help. We have brought forward £400 million of Government spending to deliver up to 5,500 new social rented homes at affordable prices while the private sector market remains weak.
	The Government believe that repossessions should be a last, not a first, resort, so we have asked mortgage lenders to review their voluntary arrangements for supporting borrowers who are facing difficulties. The Council of Mortgage Lenders has produced its guidelines, and the Finance and Leasing Association is preparing best practice guidance for lenders, which will be published later this year.
	On 22 October, the Prime Minister announced new guidance for the judiciary to halt court action on repossessions unless alternative options to help the home owner have been fully examined. The new court protocols set out clear guidance on the steps that lenders are expected to take before bringing a claim in the courts, to ensure that repossessions are indeed a last resort. Lenders will now be expected to demonstrate that they tried to discuss and agree alternatives to repossession when borrowers got into trouble with their mortgage payments. If a case reaches court, lenders will be required to tell the court precisely what they have done to comply with that protocol.
	The recent cut in the Bank of England base rate has been widely welcomed. The UK now has its lowest interest rates since 1954, which will provide some welcome relief to home owners who are struggling with mortgage repayments. In the context of responsible lending, we want customers to benefit from the rate cut, and where banks are benefiting from cheaper borrowing, we want that to be passed on to their customers, too.

Matthew Taylor: There are serious shortages of affordable housing, and fewer houses are being built at the moment. Government policy instructs local councils to reduce the leasing of private properties in order to house people in housing need, on the basis that that is a temporary solution. Right now, a temporary solution of that sort would help to meet not only the housing needs of a large number of people, but the need to cover mortgage costs of those who have these properties and would like to let them out. There might be a solution that meets the needs of two groups: those facing the loss of their property, and the many who are in housing need.

Angela Eagle: We will be looking to build further on our announcements of help to home owners as the situation progresses, and we will bear the hon. Gentleman's suggestions in mind.
	Although the world economic climate is uniquely challenging, pessimism about our prospects is neither sensible nor reasonable. We need to be not only realistic about the difficulties we face, but confident that we can get through them. The UK is better placed to weather the global economic storm than it was in the 1970s, 1980s or the 1990s. Following last week's Bank of England actions, the UK has its lowest interest rates since 1954, and we also have low inflation. Both interest rates and inflation are well below the double-digit levels that were a feature of previous recessions.

Jo Swinson: The Minister says that we are well placed to weather the economic storm, but the huge level of over-indebtedness that many families face means that they are not well placed to do so—as the individual insolvency figures for Scotland, which were released on Friday, showed when they rose by 26 per cent. between quarter two and quarter three. Families and individuals across Scotland—and, indeed, the rest of the UK—are struggling. How are those people, who face such high levels of debt because of irresponsible lending, well placed to weather this storm?

Angela Eagle: I was talking not about individuals but about the economy as a whole when I made my points about interest rates and so on. We have to deal with individual problems as they come to our attention. Clearly, some people are struggling with their debts, which is why we made our announcements to support them. The hon. Lady must not think that I was applying what I said about interest rates and inflation levels to a particular individual in trouble in Scotland—I was not. We recognise that individuals are facing difficulties, and this Government are determined to be alongside them, helping them to cope during this downturn.

Rob Marris: We need fiscal stimulus in the economy and the Government should borrow to provide it. Will my hon. Friend confirm that the accumulated national debt in the UK as a proportion of gross domestic product is far lower than that in any other G7 country except Canada?

Angela Eagle: Yes, that is the case. Scaremongering about our indebtedness or readiness to deal with these difficult circumstances, as the Opposition do, does not help.

Christopher Huhne: Will the Minister give way?

Angela Eagle: No, I have given way to the hon. Gentleman lots of times.

Christopher Huhne: Frit.

Angela Eagle: It is churlish of the hon. Gentleman to say that I am frit when I have given way to him so often. Perhaps I am getting a bit fed up of giving way to him and this time I am not going to do so. Our labour market has 3 million more jobs than it did—

Christopher Huhne: Will the Minister give way on that point?

Mr. Deputy Speaker: Order. I think that the Minister has made it perfectly plain that she is not going to give way.

Angela Eagle: Our labour market has 3 million more jobs than it did when we came into government and we are determined to use the reformed Jobcentre Plus service to help anyone facing redundancy to find new work opportunities as quickly and effectively as possible. Thanks to decisions that we have made since 1997, public debt remains low. That means that we can provide targeted support to those who need it most in these difficult times and protect vital investment in our infrastructure—investment that in previous downturns the Conservative party sacrificed and that will underpin our future growth.
	We have taken the long-term decisions to boost our competitiveness on energy, planning, transport, housing, science, skills and digital technology. As the International Monetary Fund recently stated:
	"For over a decade, the United Kingdom has sustained low inflation and rapid economic growth—an exceptional achievement....fruit of strong policies and policy frameworks, which provide a strong foundation to weather global"
	challenges.  [ Interruption. ] Opposition Members are saying that I am quoting the IMF—I am, and I am as aware as they are of the IMF's recent comments on our prospects for growth next year. If Opposition Members were to look at the IMF's mid-term forecast, they would see that it put us second after only Canada for growth in the 2010 to 2013 period. They should take account of all the IMF's forecasts, rather than taking tiny bits of the forecast out of context.
	We are determined to demonstrate that we can help our economy weather this global financial storm and to get through it in the best possible way, so that we can take advantage of the many opportunities as economies seek to recover.

Philip Hammond: We strongly support the sentiment in the first half of the Liberal Democrat motion, which identifies the fact that the asset price bubble and the over-borrowing that has occurred in the UK are a major contributor to the problem that we face. That problem was not simply made elsewhere and inflicted on an entirely innocent bystander—the Prime Minister. We agree that one of the principal concerns of the Government and this House should now be to get help to families and businesses that are struggling with the short-term challenges of recession.
	We also agree—I think that this is implicit in the Liberal Democrat motion—that the first response to the recession should be a monetary policy and that any targeted tax cuts to support families and businesses must be fully funded if we are not simply to burden future generations with the consequences of problems that we have created but do not want to shoulder. Indeed, the Exchequer Secretary came close to supporting that view when she said that we must look through the immediate challenges to the medium term. That strongly suggests to me that she is beginning to see the wisdom of resisting the temptation to borrow and spend her way out of the recession.
	We part company from the Liberal Democrats, however, on their prescription, which is that old chestnut—the easy option of tax cuts for everyman, funded by amorphous wealthy individuals, or as the leader of the Liberal Democrats described them today, top earners. That is too easy. We have reached the point in this economic debate where difficult decisions have to be taken, although I know that is not something the Liberal Democrats specialise in. Who are those wealthy individuals or top earners? They are the usual victims. [Hon. Members: "You."] Hon. Members are right. According to the Liberal Democrat proposals, every one of us is one of those top earners or wealthy individuals—anybody earning £40,800 or more.
	The Liberal Democrats want to increase tax on pensions for people on middle incomes by withdrawing the benefit of higher rate tax relief on pension contributions for those earning £40,800 or more. Those people are headmasters, police inspectors and senior nurses—hundreds of thousands of hard-working families across the country. The Liberal Democrats want further to discourage entrepreneurship by taxing capital gains as income. They propose another £20 billion of unidentified spending cuts to support their tax cut programme, but they cannot tell us how they will be achieved. In fact, the situation is worse than that; it is not just that they cannot tell us, they will not tell us.
	Some of us will remember when the leader of the Liberal Democrats was interviewed on "Newsnight" immediately after their party conference. Once he got to £5.5 billion of the £20 billion, Jeremy Paxman asked, "Where's the rest?" His answer was:
	"well, I'm simply not going to tell you the rest."
	The Lib Dems bring a whole new dimension to the concept of political transparency.
	The Liberal Democrats are all over the place on tax. They are also all over the place on the Bank of England. The hon. Member for Twickenham (Dr. Cable) claims guru status for having called for a 2 per cent. base rate cut by the Bank of England, but on 15 September he told his party conference:
	"The Government must not compromise the independence of the Bank of England by telling it to slash interest rates."
	Then he got on the train back to London and spent the next three weeks going around the television studios calling precisely for a cut in interest rates— [ Interruption. ] That is the point: while those of us who belong to parties that are either in government or aspire to be in government studiously try to respect the independence of the Bank of England, the hon. Gentleman apparently regards himself as free to indulge in wildly populist and contradictory demands on our television screens.

Susan Kramer: But does the hon. Gentleman remember that my hon. Friend the Member for Twickenham (Dr. Cable) said that it is in the Government's gift to set the inflation target and that looking at the current reality of the economy it was entirely appropriate to change, suspend or defer that target so that the Bank could concentrate on rescuing the economy? May I also remind the hon. Gentleman that although the shadow Chancellor, in response to an intervention from me, said that he did not comment on interest rates—I cannot read a quote during an intervention, but the hon. Gentleman will be able to find the exact words in  Hansard—within two weeks, he was writing in  T he Daily Telegraph that there was plenty of scope to stimulate demand with lower interest rates? That contradicts exactly what the hon. Gentleman has just said.

Philip Hammond: The hon. Lady needs to think about that. It is one thing to observe that there is a considerable gap between the level of UK and US interest rates, which was precisely the point that my hon. Friend the shadow Chancellor was making, but quite another thing to call for a reduction after having just told one's party conference that the Government must not compromise the independence of the Bank of England by telling it to slash interest rates.
	I want to be a little more consensual, however, and to return to the point where we agree with the Liberal Democrat motion—at least to some extent. Of course, this is not just a US-made problem, and the sooner the Government can take that on board and accept that this is a problem for which the UK regulatory and policy regime is partly responsible—

George Mudie: Partly.

Philip Hammond: Of course, it is partly responsible. The sooner the Government do so, the sooner that we can start making the interventions that will solve the problem and ensure that we do not repeat the mistakes in the next cycle. Unsustainable debt, the asset price bubble, UK households borrowing £1.4 trillion—the highest indebtedness relative to gross domestic product of any country in the world—and the Government operating a pro-cyclical deficit funding policy are at the root of the domestic component of the problems that we are facing.
	It is too late to do anything about avoiding this recession, but we must at least learn the lessons for the next set of challenges that we face. How do we tackle these problems? Clearly, international co-operation, including a revisiting of the pro-cyclical effect of the Basel II capital adequacy rules, will be part of the solution.

George Mudie: Does the hon. Gentleman not think that it is a bit harsh to say that we have a recession and that there is nothing that we can do about it?  [ Interruption. ] Well, that is exactly what he said. There is plenty that we can do about it, but it is, of course, politically better to get off on abstract arguments. We could do things with mortgages to keep people in their homes, and we could do things with small businesses to keep them in business and employing people. So, for saying that we can do nothing about the recession, the hon. Gentleman should apologise to the British people.

Philip Hammond: The hon. Gentleman will read  Hansard in the morning and see that I said that it is too late to address the unsustainable debts, the asset price bubble, the over-borrowing by households and the pro-cyclical Government deficit funding policy. It is too late to do anything about them to address the recession, but he is absolutely right to suggest that we can do plenty of things to alleviate the immediate impact of the recession, and I shall run through some of them in a moment.
	I was talking about how we tackle the challenges. International co-operation is one way. We need to tackle areas of domestic regulation—for example, ensuring that bonuses do not compound the problem by creating perverse incentives that lead banks into the kind of areas that have delivered the problem that we now face. Is there a case for including asset prices in the targeted inflation measure? We have looked at that, and many academic economists around the world have asked themselves that question. Our conclusion is that that is not the right way to proceed, but we need to address asset price inflation.
	We have proposed specifically a debt responsibility mechanism by which the Bank of England would take on the role of measuring aggregate credit debt in our economy and transmitting its concerns to the Financial Services Authority, which would then use those concerns in managing the capital adequacy ratios of individual British lending institutions—an effective domestic solution to the regulation of the credit cycle. I should be interested to hear from the Economic Secretary when he replies whether the Government have something to say about that proposal and, of course, fiscal discipline—not a Liberal Democrat unique selling point. We need in place a framework that has the confidence of the markets and that effectively constrains Government action, not just when the going gets difficult but throughout the cycle—not a set of rules that crumbles as soon as the Government run into the first hurdle.

Lynne Featherstone: Does the hon. Gentleman agree with me about bonuses? I opened an account at Barclays a few weeks ago. On the news that it was seeking funding to avoid Government intervention, possibly involving not paying bonuses, I contacted the bank to say that I did not want to go ahead with my account, and it was very worried by that, having asked me the reason why. I wonder whether there is anything in people power—perhaps by having to print directors salaries and bonuses on bank statements. Does he think that that might give the public some sense of where they want to keep their money?

Philip Hammond: If the hon. Lady wishes to exercise her people power, I point out that it is a statutory requirement for directors' salaries and bonuses to be published in banks' annual report and accounts.
	The second issue that I want to address is the Bank of England's monetary response in the past few weeks. I agree with the hon. Member for Twickenham that it has been most welcome, but our concern must be that it has not been fully effective. Rhetorical attacks on banks in general, or banks in which the public now have a stake, will not solve the problem. Of course the rescue of the banking sector was undertaken not simply to save the banks, but to save the real economy from meltdown. Presumably, now that we, collectively, are investors to the tune of £37 billion in banks, we want to make sure that we get our money back. With the greatest respect to the hon. Member for Luton, North (Kelvin Hopkins), I do not think that that cause will be advanced by putting him in charge of lending policy. Politician-dictated lending policies will not be the answer.

Kelvin Hopkins: Is the hon. Gentleman more concerned to make sure that nice, big bonuses are paid than to ensure that the public are paid back their money?

Philip Hammond: No, of course not. The two objectives with regard to the public-sector investment in the banking system must be, first, to save the banking system so that we can protect the real economy, and secondly to get every penny of the £37 billion back, preferably with a substantial gain for the taxpayer over time. Those must be our objectives. Let us not forget that we have a big stake in the banks in question.

John Redwood: Will my hon. Friend acknowledge that £18 billion of cash is going to Abbey/Santander for Bradford & Bingley, that there was £3 billion of equity investment in Northern Rock, and that unfortunately our first 100 per cent. investment, Northern Rock, made us a loss of £580 million in the first half of the year? Is there not therefore a lot of work to do to make a profit?

Philip Hammond: My right hon. Friend is right, but he is perhaps rather generous to describe the £3 billion as an equity investment in Northern Rock; I think that it was a write-off of debt, about which the Government had little choice.  [Interruption.] I know that it is counted as an equity investment, but I do not think that it was made out of choice.
	Surely the solution is to mend the mechanism that, until last year, always linked Bank of England base rates with the banks' costs of funding. We can of course urge the banks to pass on changes in the official rate, but we also need Government action to secure the reopening of the money markets, so that banks' borrowing costs follow the base rate down. We will then be in a far stronger moral and practical position to urge the banks to pass on the Bank of England's monetary policy response to consumers and businesses.
	The motion in the name of the hon. Member for Twickenham refers to
	"£500 billion of taxpayers' money"
	having gone into the banking system. I think that that is made up of £200 billion in the special liquidity scheme, £37 billion-odd of capital, and £250 billion in money market guarantees. The latter was the largest component of the package announced by the Prime Minister and the Chancellor a few weeks ago, together with the recapitalisation. As far as I can tell, that bit of the package is not working. I do not know whether the Economic Secretary can, in his winding-up speech, give us any figures on what take-up there has been of that £250 billion. The information is difficult to come by, but my inquiries in the City suggest that there has been minimal take-up. That may have to do with the conditions attached or the pricing. That is a critical matter that the Government must look into, because the whole package depends on our being able to reopen and restore confidence in the money markets, so that in future, the Bank of England's base rate cuts are automatically followed by cuts in the cost of funding to the banks, and thus automatically followed by cuts to mortgage rates, small business overdraft rates, and lending rates to families.

Ruth Kelly: The hon. Gentleman makes an interesting point about use of the guarantee. Of course, it was a very innovative proposition at the time. Does he not agree that the most effective guarantee, were it to work brilliantly, would not be taken up at all?

Philip Hammond: Ultimately, once confidence has been completely restored to the markets, I guess the right hon. Lady is right, but sadly that is not the position that we are in. I hope that when the Chancellor and the Prime Minister announced the £250 billion guarantee facility—a very big, eye-catching, headline-grabbing number—they did not announce it with the expectation and intention that virtually none of it would be taken up. I hope that they announced it in the expectation that it would have the desired effect. It has not, however, because if it had, LIBOR rates would have fallen by 1.5 percentage points last Friday. That is where we need to get to. We must restore the link, because that is what is broken, and that is what needs urgent attention if we are to fix the credit famine that is affecting families and small businesses throughout the country. No amount of rhetoric or exhortation will deliver sustainable relief if we do not fix that mechanism.

John Reid: I have listened very carefully to the hon. Gentleman talk about fixing the mechanism, but will he tell us how he would fix it?

Philip Hammond: The Government have already announced the £250 billion package, which the right hon. Gentleman will remember we supported, but the Government now need to consider the pricing and the conditionality that are attached to the package. The Economic Secretary may tell us later that I am misinformed and that hundreds of billions of pounds of the guarantee facility have been taken up, but if that is not true and it was a critical part of the package, the Government need urgently to examine how that part of the mechanism works. This is not a party political point; we supported the package.

John Reid: My question was not meant as a party political point either; it was meant for all our elucidation. I shall say something later about inter-bank lending, which is right at the heart of the matter, but the hon. Gentleman said quite clearly that the mechanism is not working, so, if he believes that it is not, what does he think would?

Philip Hammond: I suspect that the mechanism is not working, and I suspect that the reasons why are partly the pricing, partly the conditionality and partly, perhaps, the toxic assets that remain in the system. We heard a suggestion earlier about the creation of a "bad bank". I should like to hear from the Exchequer Secretary not that she has a magic wand but that the Government at least recognise that the extent to which that part of the package has not been taken up demonstrates that the package as a whole is not delivering the intended results, which it clearly is not. That is a problem for all of us, and one that we, collectively, have to address.
	The third point on which we agree with the Liberal Democrats—at least I think we do—is that spending and borrowing our way out of a recession, over and above the levels that are implied by the automatic stabilisers and the Government's commitment to continue some support for those who lost out in the 10p tax fiasco, will not work and is not sustainable. Future generations would be burdened with even higher debts and the recovery might be threatened by the prospect of large tax rises. We would simply be sowing the seeds of the next crisis, but, as we heard earlier, carefully targeted and fully funded tax cuts, and other specific support measures, would bring relief to families and businesses.
	We do not agree with the Liberal Democrat approach in seeking to raise taxes on middle-income earners to pay for cuts, and we do not believe it credible to claim to fund cuts on the back of unidentified spending cuts. Fiscal prudence and a concern for the future does not mean, however, being unable to help, although others who have behaved more prudently in the past have greater scope for action now: the Australians recently enjoyed the luxury of making a decision to spend half their public sector surplus on stimulating demand from families and businesses. We have set out a number of suggestions and already announced the following proposals: a council tax freeze, funded by cuts in Government consultancy and the Government's advertising budget; the abolition of stamp duty for 90 per cent. of first-time buyers; the use of the Post Office card account to give access to direct debits—thus cutting the fuel bills of the most vulnerable householders—while the Government appear set on privatising it; cuts in the small companies corporation tax rate, funded by scrapping the annual investment allowances; a temporary cut of 1p in the pound in employers' national insurance contributions for the smallest employers for six months to stimulate employment; the deferment of small-to-medium enterprises' VAT bills for six months at commercial rates of interest to help businesses with their cash flow; and, changes in the law to provide breathing space for businesses facing insolvency and households facing repossession for amounts that were incurred as unsecured debts. We continue to identify opportunities for targeted, fully funded interventions that will bring much-needed relief to families and businesses.
	I turn briefly to the Government amendment, which has the now-familiar focus on the global dimension—the subtext broadly being, "Not our problem, guv. The problems were made somewhere else and we are innocent victims." The Exchequer Secretary used the words "global" or "globally" 21 times in her speech, and I heard no acknowledgement in it of the policy and regulatory failures in the UK. The Lib Dem motion sets those failures out and we have repeatedly drawn attention to them.
	The fact is that the claim to have abolished boom and bust heralded in the UK the age of irresponsibility against which the Prime Minister now rails. There was five-times-income mortgage lending and there were 125 per cent. mortgage loans: the Government not only failed to curb household borrowing, but through the years of economic growth ran the biggest deficit of any developed economy. The Exchequer Secretary claims that Government debt has been reduced since 1997, but she and almost everybody else in the House knows that the Office for National Statistics figures show that, in fact, Government debt is up a little on the 1997 level. After 10 years of continuous economic growth, our national debt position has not improved but slightly worsened.
	There is no sense in the Government amendment of the scale of the challenge. The Exchequer Secretary likes to draw comparisons with statistics relating to the end of the last economic recession, but the appropriate comparison for where we are now is with its beginning. In the last full year before that recession, there was a budget surplus of 0.2 per cent. of GDP; this time, we are entering recession with a budget deficit of 2.6 per cent. of GDP, as a result of having borrowed through the boom.

Rob Marris: May I take the hon. Gentleman back a little to the issue of household debt? One of the difficulties has been that for more than 30 years there has been a shortage of housing supply in the UK, and that has led to ridiculously high property prices. On the back of that, equity release, based on optimism that house price rises would continue, has gone on apace. The Government—and, I hope, the Opposition—are stretching towards what we need to do, which is to build a lot more housing so that there is no boom and bust in the housing market.
	Furthermore, one of the drivers of the current situation has been the Conservative policy, in the mid-1980s, of removing the ban on equity release from mortgages. Like me, the hon. Gentleman is old enough to remember when people could not get money from a building society or bank on a house unless it was to buy or improve the property—the money could not be for buying a car, more furniture or whatever. We need to look at getting back to that position.

Philip Hammond: I urge the hon. Gentleman to be a little cautious with that analysis. I suggest to him that although house prices are now falling rapidly—and, according to the hon. Member for Twickenham, will fall significantly further—the housing shortage has not gone away. The housing-asset price bubble has been driven by the growth of credit and the invention, for it was an invention, of clever new ways of creating credit, mainly through securitisation. That led to more money being available in the system and manifested itself as an inflation in asset prices.
	I acknowledge, of course, that the housing shortage is an underlying problem, but a lot of people with no borrowing power—short of their houses—do not in themselves drive up house prices. House prices get driven up when the people who want to live in the houses can borrow effectively unlimited amounts of money to bid up the prices. That is what we have seen in the past few years.
	The Prime Minister has repeatedly claimed, and did so again as recently as last week, that Britain is well prepared to weather the economic storm. In fact, back in January Alan Greenspan described us as being particularly vulnerable. The EU reports, and the IMF report that we saw last week, have confirmed that Britain is ill prepared for the recession, that we go into it with a bigger deficit than any other country and that because of our economy's narrow base, we are struggling to find the locomotive that will pull us out. That is because we have been so heavily dependent on financial services, rising public spending and the housing market during most of the economic growth of the past decade.
	The Minister used the term "schizophrenia" towards the end of her speech. However, I have to say to her—perhaps the Economic Secretary will clear this up later—that the Government's position is far from clear on the question of an overall significant further fiscal loosening. We have heard lots of rhetoric and been given lots of briefings that are then not matched by the words that come out of the Prime Minister's or the Chancellor's mouth. Having heard the hon. Lady's speech, we are none the wiser as to whether the Government are proposing a massive fiscal loosening or merely considering targeted tax measures—along the lines that the Liberal Democrats propose and we have discussed—that are fully funded by changes elsewhere.
	The immediate imperative must be to help those caught in the fall-out of this rapid economic decline—families facing repossession, sound businesses caught in a short-term cash crunch, employers who are having to face the agonising decision over letting valued staff go because their orders have dried up—and to fix the broken transmission mechanism in our monetary system. However, we must not lose sight of the lessons of the past few years as regards how we got to this point. A recession caused by excessive borrowing cannot be solved by borrowing and spending our way out of it. That will not work, and anyone who doubts it should ask the Japanese.
	A responsible approach combines immediate, fully funded help for families and businesses to weather the recession; action domestically and internationally to restore confidence and thus liquidity to financial markets; a rejection of the superficially easy route of a massive increase in borrowing to pay for an unfunded spending splurge; a careful and considered response to the weaknesses that have been exposed in the regulation of our financial system; a proper, sustainable medium-term fiscal framework to restore market confidence that does not crumble at the first hurdle and will get the public finances back into a position where Governments will be able to help families and businesses in future downturns; and a focus on fixing the underlying weaknesses in our economy—the productivity gap, the skills gap, the unreformed welfare system, and the negative productivity growth in significant parts of the public services—all of which must be resolved if Britain is to maintain its prosperity and resume a sustainable growth path long after this immediate crisis has passed. That is the approach that Her Majesty's Opposition will continue to pursue.

Several hon. Members: rose —

Mr. Deputy Speaker: Order. Before I call the next hon. Member to speak, may I remind the House that a 15-minute limit on all Back-Bench speeches will apply from now on?

John Reid: I should like to start with several welcomes. First, I welcome the fact that we are having this debate, because given the enormity of the challenge we face, the more time that we spend discussing it and seeking solutions and responses, the better. Secondly, I welcome the steps that are already being taken by our Government. I hope that that is widely recognised. Whatever other areas of disagreement might exist in this House, the Prime Minister, the Chancellor and the Government should be congratulated on the courage, decisiveness and leadership that they have shown not only in this country but internationally. It would be churlish for anyone in the Chamber not to recognise what has been recognised in so many other countries. Thirdly, I welcome the fact that the Government, and indeed many Opposition Members, recognise the requirement to address these complex issues in a multi-layered way: at the international, global level; at the level of central banks; at the sovereign, national level; at the level of inter-bank relationships; and at the level of individuals.
	I understand that this evening, according to news reports, the Prime Minister will again urge a restructuring and reformation of the international monetary regulatory system. I do not know why that makes news; he has been doing so for years. Indeed, not only has the current leader of the Labour party been doing so, but the one before that, and the one before that. I have been here long enough to remember the one before that, Lord Kinnock, calling for a revision of Bretton Woods in the early 1980s. It just shows that if we stay around long enough, common sense—born out of a crisis—afflicts everyone.

John Redwood: Does the right hon. Gentleman think that one of the priorities should be to put more capital into the International Monetary Fund so that it has enough money to lend to impecunious countries that are borrowing too much?

John Reid: I certainly think so, but there has been a shift in economic predominance from the west to the east, and we cannot merely ask other countries to inject liquidity into the international monetary system or the IMF without having regard to the fact that they may want something in return. That is an element of the international rearrangement of the mechanisms set up in the late 1940s, and since the 1970s it has been obvious that those mechanisms are inadequate in some respects.
	I welcome many of the measures that have at least been hinted at regarding the protection of individuals, particularly those who need the most protection, through targeted cuts in taxation and so on. I do not know whether the Government are considering such measures. If so, I feel that they are to be welcomed. Of course, such measures need to be responsible and prudent, and there are automatic stabilisers in the system anyway, which entail an increasing dependence on Government finances because of the reduction of incoming income, and the increase in outgoing expenditure to protect the poorest.

Philip Hammond: Will the right hon. Gentleman clarify whether he is advocating to his colleagues on the Front Bench unfunded tax cuts that create a fiscal stimulus, or the sort of funded tax cuts that both Opposition parties have talked about?

John Reid: Ultimately, all tax cuts have to be funded from some quarter. I agree entirely with the Prime Minister and my Front-Bench team that a recession is not the time to cut back on public expenditure. Some of the increase in borrowing is automatic through the stabilisers, some of it comes through capital programmes, and some of it could be the result of targeted taxation cuts that result in borrowing. The overall limit to indulging in such borrowing has to be set at a responsible level. The point has been made that we are in a stronger position to do that than many other countries because of the stewardship of the economy during the past 10 years.
	In the limited time that I have, I want to address a point that I raised with the hon. Member for Runnymede and Weybridge (Mr. Hammond), not for partisan reasons but because I am genuinely interested in the solution to what I regard as the central problem, which is that of inter-bank lending. My hon. Friend the Exchequer Secretary said that that was the primary task. It is relatively easy to envisage how we would address the reconstruction of the International Money Fund and associated bodies, and to see how we would address the problems of an individual bank through recapitalisation. It is a controversial matter, but it is relatively easy to see how we would help an individual.
	It is not relatively easy, however, to see how we might get long-term, sustainable acceptance and confidence among banks that resurrect inter-bank lending, and I would like to deal with that point today. In doing so, I want to make it plain that what I have to say is a result of my involvement in very unusual parliamentary practices in the recent past—effectively, staying silent, listening and thinking. I apologise, and I include that because the ideas that I refer to are not my original ideas but those of some of the people I have been speaking to.
	We all know that the global banking system has been under severe stress for more than a year, largely owing to a lack of trust between banks. Lack of confidence has resulted in banks largely, although not exclusively, being prepared to lend to each other only at accentuated rates on an overnight basis. That makes it impossible for the banks to provide the necessary funds to industry or the public—both need funds for a much longer time.
	However, if a bank is not fully confident that it can get money in future, it cannot take the risk of lending the money that it has to customers. That problem is easily described. In dealing with the difficulties in the inter-bank markets and in trying to make funds available for industry and the public, several Governments have guaranteed the inter-bank markets. I contend that that can be only a temporary solution and that none of us can be confident that the crisis would not happen again if the Government withdrew the guarantees. That gets to the nub of a thorny problem. Indeed, in the absence of change, a crisis is likely to recur. Once confidence has been lost in the working of the banking system, it becomes far more fragile because everyone knows that it has broken down once and that, therefore, it can happen again. That clearly points to the need for a new structure.

Susan Kramer: The right hon. Gentleman is talking about an incredibly important matter, which, as he says, has been neglected. Does he realise that in the United States, several states—for example, California—are initiating major efforts to try to identify whether fraud lies at the bottom of many of the problem loans on banks' books? There is concern that fraud and extreme mis-selling, which has not been unravelled in the UK and other markets, is holding up reinvigoration.

John Reid: I do not intend to deal with fraud today—the issue of confidence is difficult enough to tackle.
	The essence of the banking system is intermediating between the essentially short-term nature of deposits and the longer-term nature of loans. In addition, the banking system intermediates between areas where there are surplus funds and those where there is excess demand for them. The inter-bank market has evolved to deal with that intermediation. The problem is that the market has evolved largely on a self-regulating, principal-to-principal basis. The market is also extremely opaque, with participants having only limited, historic information about their intended partners, whether borrowers or lenders.
	The problems that have arisen require a new structure for the inter-bank market, one which instils confidence, is transparent to the regulators at the very least, and is fully controlled. Regulation must be enhanced to focus on all exposures rather than operating in a world where exposures can be made to disappear by being taken off balance sheet.
	There is no doubt that the problem is huge. I make a modest suggestion, which may catch the Government's attention and that of other hon. Members as a possible solution. In summary, it would entail the world's central banks establishing an international monetary exchange, through which all future inter-bank transactions would go—let us call it "IMX". It would operate like any normal exchange, with the central banks fully and unconditionally guaranteeing the exchange counterparty performance, so that no bank would have a reason not to supply funds to the exchange. All central banks would be fully responsible for the liabilities to the exchange of the banks for which they were the primary regulator. The central banks would own and run the IMX.
	In the time available, let us consider the mechanism carefully. The IMX would operate like any other exchange, with the critical benefit that exchange participants could deal freely with the exchange without having to inquire about other participating members' credit status. Exchange technology is already well established and is available from many vendors. In my view, and that of those with whom I have discussed the matter, an exchange could be established in a matter of months by adopting the proven technologies from established exchanges.
	There should be an exchange for each major currency, with the initial establishment of a global euro exchange, a global dollar exchange, a global yen exchange and a global sterling exchange, which would be owned and run by the respective central banks for each currency. Each central bank would guarantee the performance of its relevant currency exchange and set rules for the institutions that would be eligible to borrow from the exchange.
	It is possible to identify some key features of such a system, even in the limited time available. First, anyone could offer liquidity to the exchange at a set price, including the central banks. Secondly, all inter-bank lending of participating institutions must be transacted through the exchange. Thirdly, borrowing from the exchange would be at the same price irrespective of the borrower, that price being set by the providers of liquidity to the exchange at any point in time. Fourthly, each central bank would set limits on local institutions and charge them for use of the guarantee.
	It is also possible to identify the major benefits that might flow from such a system if established. Such a system would restore the necessary trust and confidence to inter-bank lending, allow for an innovative and free market to operate, and provide regulators and Governments with consolidated real-time information on global liquidity flows and counterparty exposures, thereby helping to prevent excesses before they occur. One of the problems that we have experienced in the past is the lack of forewarning, just as the asset valuation of lenders and borrowers was opaque. Such a system would reduce redundancy through inter-bank netting at the exchange level and significantly reduce counterparty management and friction costs. I therefore put my proposal forward as one worthy of consideration.
	Such a system would do one further thing: assist in providing the basis for regulation. The current structure of the inter-bank market, coupled with the off-balance-sheet nature of many products, makes proper regulation of the financial system almost impossible. The unregulated nature of inter-bank and derivative activity, to which spokespersons in all parts of the House have referred, together with the many off-balance-sheet products, has facilitated the largely uncontrolled growth of credit and provided no early warning system to central bankers on either a global or local basis.
	The introduction of an exchange would provide central banks with the complete and instantaneous information required to regulate those banks that they stand over. The inability of any institution to access the exchange without receiving the approval and meeting the requirements of the authorising central bank would provide that central bank with a formidable array of controls, information and potential regulatory levers.
	We could ultimately provide an exchange that was self-funding, because institutions that would be members of the international monetary exchange should be charged for the access to funds which the scheme affords them. The unit cost of exchange participation could be set based on the stand-alone rating of the bank and the maturity of its net obligations—namely, on the degree to which it is a net borrower from the exchange.
	I do not pretend that there are not many other considerations that would affect my proposal, such as the central bank limit and over-the-counter transactions, such as credit default swaps and so on, which can be moved into it. However, such a system would at least begin to tackle the central problem that we face when we consider the recession, the acute crisis that we have come through and the chronic problems that we are somewhere near the beginning of addressing. In many ways, the most intractable problem is restoring sustainable confidence in the inter-bank lending system.
	I thus conclude by saying that, irrespective of the economic actions that are taken to stimulate national economies or, indeed, the global economy, it is essential that structural change should take place in the global banking market to avoid a future reccurrence of the collapse in confidence and the freezing of the banking market that we have seen. I am entirely with the Prime Minister and condone his leadership in attempting to reformulate the international monetary institutions. However, in the absence of an exchange, it is unlikely that full confidence will ever be restored in the global banking system, as today's problems can easily reccur.
	The essence of banking is ensuring the efficient use of funds for the benefit of industry and society, with a fully functioning inter-bank market being the cornerstone of that intermediation. However, the current inter-bank market is not working. It is inefficient, opaque and largely unregulated. Introducing a regulated exchange would restore confidence, and it would be more efficient and transparent, as all inter-bank and even derivative-type activity could be instantaneously, centrally recorded. It would also greatly enhance the regulatory power and information of the central banks. It would not solve all the problems, but I believe it would be a major contributory factor to addressing the central problem.

John Redwood: The right hon. Member for Airdrie and Shotts (John Reid) has made an important speech, and his idea is worthy of longer consideration, although some of the details would need to be fleshed out in order to see whether it was practical or could work. What motivates it is a sense shared on some parts of the Labour Back Benches, and certainly on the Opposition side of the House, that the twin crises that we are living through—the financial crisis and the recession—are not yet responding to treatment as quickly as we would like, and that the Government would be well advised to listen to friends on their side of the House, and to people on my side of the House who wish them well in trying to tackle the crisis, when we offer them advice on the other things that they could do to head off some of the worst disasters that might still lie ahead.
	Listening to the Exchequer Secretary, I felt that she was being very complacent. She wanted everyone to believe that this was a global, rather than a British, crisis. Let us go back to August and September 2007, however. Northern Rock was a very British bank, lending too much money to British mortgage holders to pay too much for their houses, and getting into difficulties because it and its customers were greatly over-extended. It was regulated by British regulators, and they let it down very badly. They allowed it to expand too fast, and then starved the money markets of money in August and September. The Chancellor and the Governor of the Bank of England then lectured Northern Rock on how it had to live with its own mistakes. They brought the bank down and, afterwards, decided that the taxpayer should stand treat. That was not good management, or good regulatory practice, and I hope that the Government will learn from that and not do it to another bank.
	If we look at the problems that the Government now have with Northern Rock, we can see what a bad so-called solution that was. Taxpayers were put on risk for more than £100 billion, and they have lost £580 million in the first half year in owning 100 per cent. of the equity. That was the stated interim loss. The second half losses might be bigger; there will certainly be such losses. Extra capital amounting to £3 billion has had to be sunk into the bank, and I do not think that we shall see a return on that any time soon. Half the staff are being sacked, £14 billion-worth of mortgages have now been repaid, and the bank is unable to make new advances. It is crippled, higgled and gravely damaged, and the taxpayer is going to have to pay all the costs involved in winding up a lot of the business, getting rid of the staff and shrinking the thing that was once a flourishing institution.
	I invite hon. Members to cast their minds back to what the directors and owners of Northern Rock were debating in the spring and summer of 2007, as recorded in their annual report, which came out just before the crunch. They were discussing their response to the regulatory signals that were being sent out. The British and global regulators, but particularly the British regulators for Northern Rock, were telling them that they had too much capital for the volume of loans that they were making, and the discussion within the Northern Rock boardroom related to how it could get its capital down, or its loans up, in order to get nearer to the ratio that the regulator said was needed.
	More recently, the British regulators have said to all the banks in Britain that the ratios to which they used to manage are no longer sufficient for the current circumstances, and they are making all banks have more capital, relative to the amount of lending that they do. So in the good times, when there was too much credit, the regulator was saying, "Don't worry. Lend some more. You don't need to have a very high ratio." In the dreadful times, when there is very little credit available for anyone, the Government and the regulators have decided to send the alternative message that banks in the middle of this crisis have to raise a lot more capital, relative to their lending. That does not strike me as wise regulation on either score, but once the regulators have taken such action it becomes the new hurdle or standard, and every other organisation must do the same, not just to meet the regulatory requirements but in an effort to rebuild confidence. The Government need to understand the important point made by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), who observed that the £250 billion package of guarantees was not being taken up to a great extent. That is a sign that the package was not properly constructed.
	I fully support the action of Government and the Bank of England in standing behind any major bank that is in trouble, and have always done so. Only a lunatic would want to see a major bank go down, and in view of the impact of Lehman's going down, I would think that even someone who was a lunatic before that event might now understand that it is better to manage institutions through crises such as this rather than precipitate a major crash on the back of a very large institution's biting the dust. That is why I supported the Government's £200 billion of extra loans; and it is why I supported all the extra money that they flushed into the money markets, and the £250 billion guarantee scheme.
	I think that that guarantee scheme should be revisited. It is not the case that the lending rates in the market between the banks have fallen to the extent that they have returned to their normal relationship with the rates that the Bank of England is signalling, and it is not the case that there is now a fluid and functioning inter-bank market. The best chance that the Government have of getting that market going again is to tweak, or change, the guarantee scheme in the short term, so that more money can flow between the banks. They should be warned, however, that it will never function as well as it did before the crunch, because the regulators—perhaps for good reasons—are now requiring much more capital relative to the amount of lending. All the banks are now fighting to reduce, rather than increase, their loan books, because that is what the regulator and the Government are asking them to do. The inter-bank markets cannot be expected to be as fluid and successful as they were in June 2007, because the regulatory mood—along with the confidence mood—has changed in the banking market.
	An additional problem is that the twin difficulties of the financial crunch and the banking crisis are reinforcing each other. While we have lived through some of the worst parts of the financial crunch—let us hope that we now have more stability, because there is a clear understanding in the markets that Governments around the world stand behind their banks in one way or another—we are only on the edge of the serious recession that is now being widely forecast by independent bodies as well as by most Governments. I suspect that this Government will soon be forecasting one, when they get around to revising their figures.
	That factor is particularly damaging to an economy such as that of the United Kingdom. The last 10 years in particular have seen very lopsided growth in Britain. Growth rates in London, with its financial services, professional services and business services, have far outpaced those in the rest of the country. Indeed, the growth rate in London has been more than double that in the north and west of the United Kingdom, reflecting the success of those financial institutions and the impact of the credit bubble on property-related and finance-related activity emanating from the very expensive districts in the centre of London. That concentration of effort makes the British economy doubly vulnerable to the downturn now hitting it. The epicentre of the crisis is the financial services and property sector, which is going to fall further—and we have more of it to fall than more balanced economies on the continent and in the Americas.
	As the recession bites, the loan experience on all the bank books will deteriorate further. To date, we have been discussing the mortgage mess. The Government would like us to believe that the only mess that we really had to face was the sub-prime market in America, and it is true that some of our banks foolishly lost some money on that market, but we know that a far bigger crisis for the British banks was the mortgage crisis in Britain, where too much mortgage advance was made on house prices that were too inflated. There are big losses coming through as a result of that, which is why it was Northern Rock and Bradford & Bingley that needed special treatment in the United Kingdom. British banks under British regulators built a British property bubble.
	The next phase of the crisis, unfortunately, will be a sharp deterioration in the loan experience that constitutes lending to everyone else, not just those involved in property and finance. The economy is now falling off a cliff, and activity is falling dramatically in sectors beyond finance and property. That means that there will be many more bad loans throughout the range of business activities and the industrial and commercial services sector, from here to John o'Groats. All around the country, the same pressures will be felt as the recession bites.
	That is why I repeat my advice—it is heartfelt, as I love my country and wish it to do well—that when thinking about buying banks, the Government should be extremely careful about how much equity risk they take on. If they are really going to persist in taking major shareholdings in banks the size of RBS, which has an average balance sheet over the year of £2 trillion, a sum that is bigger than the national income and five times the tax revenue of the country, they should understand that it requires only a small mistake in terms of a bank's assets and liabilities that falls on the wrong side for taxpayers for them to have very major losses on their hands.
	That is why, in this period of relative tranquillity before all the deals go through, the Government should be looking again at the terms and the balance sheets that they will be taking over. They should be sending in the forensic accountants now. We all know they will stand behind the banks, so there will not be a confidence problem. There will, however, be a confidence problem in the Government, and in the amount of Government debt they will have to issue, if they do not behave sensibly by doing some basic accounting work and risk assessment on these huge banks that they are now thinking of nationalising or buying major shareholdings in. The Government should be warned by the fact that they lost £580 million in the first half on a very small bank—Northern Rock. They should remember that RBS is 20 times the size of Northern Rock, so if something goes wrong they will be playing not for a few billions of pounds, but for tens of billions. That is serious money, even for a rich country with a Government who collect as much in tax revenue as the current Government do.
	If the Government press on, they must understand that where they are majority owners of a bank, they are responsible for everything. Ultimately, they are responsible for the lending policy, the bonuses and the number of highly paid staff, and for whether a loan is made to Mr. Snooks or Mrs. Smith. They will be made responsible by their electors—the people out there—who will not understand if they say, "This nationalised bank is not actually run by the Government. Yes, we the Government put in all the money on behalf of the taxpayers, but we have no control over how the money is spent."

Kelvin Hopkins: I am following with great interest what the right hon. Gentleman is saying. He seems to be supporting my earlier contention that the Government ought to put in people to regulate the internal operation of the banks, to make sure that they act in the public interest.

John Redwood: There is at least one difference between us, in that I would not nationalise a bank at all, as I think that would be too dangerous for the taxpayer. The hon. Gentleman is right, however, that if the Government persist in nationalising—taking a majority stake or complete control—they cannot avoid ultimately being responsible for the financial consequences of their actions. I think that Ministers are completely responsible for Northern Rock. They own 100 per cent. of it on behalf of the taxpayer, and I quite understand why people will want to make that an issue with Ministers.
	Why did the Government take this huge stake in Northern Rock? They presumably did so because they felt they could do a better job in the public interest by backing the bank than by enforcing a market solution. They did not seem to want a private sector bank to take over Northern Rock, and they did not want just to lend it some money to see whether it could then find ways of making more profit or raising capital in the normal way. I therefore think the hon. Gentleman has a point. When Ministers say they will not intervene, they do not really mean that, of course, because they have already told us they have views on bonus payments and on how much lending should be done. When Ministers try to enforce elements of those views, they will discover that they are trying to do so in respect of very complicated institutions that could lose the taxpayer a fortune if the wrong guidance is given, and which might lose them quite a lot of money even if they do not give any guidance at all. They will find this situation extremely difficult.
	It is also crucial to offer people the hope that, in the process of settling the banking crisis in the way we have been debating, more will be done to try to offset the real damage being done to the rest of the economy. I welcome the new enthusiasm in all parts of the House for tax reductions. It is vital to put more spending power into people's pockets as quickly as possible. Income tax cuts for those on lower and middle incomes would be extremely welcome, as it would be the quickest way of injecting more spending power into the economy.

Ruth Kelly: Does the right hon. Gentleman accept the proposition put from the Conservative Front Bench that those tax cuts should be fully funded, or is he arguing for a fiscal stimulus?

John Redwood: I would not start from where the right hon. Lady and her Government start from. I would be running a much more prudent show than they are, because I would not want to spend all this money on bank shares; I would do it by short-term loans and in the other ways that have been identified, so I would have room for a fiscal stimulus in my Budget. My Front-Bench colleagues have backed the banking package in full, which was very generous of them. However, they are absolutely right: given that amount of borrowing—the banking package as well as the rest of the borrowing—it is too risky to borrow yet more for the fiscal stimulus. They are drawing attention to the fact that Britain is not well equipped to do what it should be doing, which is to give a fiscal stimulus by cutting taxes and borrowing in the short term to pay for that tax cut. Given where the national accounts are, it would be ruinous to add yet more to the borrowing.
	The Labour Government seem to believe that there is a free lunch out there. They believe that because a recession is coming, they can say that they can borrow any amount they like, and the markets will miraculously supply it. They need to be very careful. Past history in this country shows that markets can be very forgiving for quite a long time. Of course, markets are just groups of people: they are all the people in the country and overseas counterparties, and they, like Ministers, want the economy to do well and would like all these packages to work. However, if the Government start to present markets with too big a burden of borrowing—if they say that they need to borrow such colossal sums that the markets say, "But we're not sure we can find that money any more"—we will be in a far worse crisis than we are currently experiencing.
	At the moment, the Government seem to think that the answer to too much borrowing and lending in the private sector is to transfer it to the public sector. That is not the answer. If the problem really is, as they described, too much borrowing and lending, we have to go through a process of reducing it. We can do that in a very sharp, quick, deep, damaging way; or we can try to manage it over a longer period, so that there is not such a sharp downturn, but a longer period of slow growth, no growth or modest reductions in activity. The Government seem to have lurched from wanting a very sharp reduction in private sector debt—that is what their regulators and the Monetary Policy Committee were saying last year, with the Chancellor saying that it would serve the private sector right—to wanting a much slower run-down. If they simply transfer it all to the Government sector and build up even more Government debt, they might have another problem on their hands: that of finding it very difficult to finance their borrowing at a sensible price.
	The Government have already taken a big hit on the currency. We are about a quarter worse off against the dollar compared with a few months ago, there has been a very big slide against the yen, and against all the strong currencies of the world sterling is very weak. If the Government are not prudent enough, they could also have a further leg down on sterling, which would make us all a lot poorer and make it more difficult to raise the money that they need to carry out their tasks.

Ruth Kelly: I congratulate my right hon. Friend the Member for Airdrie and Shotts (John Reid) on making a really innovative proposal today; for some time, I have not heard expressed in this House a new proposal on dealing with the issues that confront us today. It could be a way genuinely of dealing with counterparty risk, and of providing incentives for different countries across the world—surplus or deficit countries—to co-operate and abide by certain international rules of the game. His proposition certainly deserves to be explored further.
	I have listened with interest to the contributions, particularly as I am a relative newcomer to this debate. The Liberal Democrats have at least been consistent in their critique of the Government. It was quite interesting to hear the sharp change in tack from the official Opposition Front Benchers. One moment they were espousing bipartisanship; now they seem to have lurched to the opposite extreme of criticising everything that the Government do. Both Opposition parties have come together in blaming the Government, and particularly my right hon. Friend the Prime Minister, for presiding over a build-up of personal and public debt during his time as Chancellor of the Exchequer. They seem to think that the credit crunch and the global issues that we face are largely the result of domestic policy errors in the United Kingdom. I argue that those accusations are fundamentally misguided. They misdiagnose the problem, and when one misdiagnoses the problem it is impossible to provide accurate solutions or to learn the lessons necessary for the future.
	The Government should be judged on whether they understand the nature and scale of the current crisis; on whether they are putting in place the right actions to deal with it, both for now and for the future; and, lastly, on the state of the economy as we enter the forthcoming downturn—did we fix the roof as the sun was shining? On all three counts, the Government will be proved to have had the insight and the character necessary to deal with the global downturn—on all three counts, the official Opposition, at least, have failed.
	Nobody disputes the severity of the current crisis. When, at the end of August, my right hon. Friend the Chancellor described the financial circumstances as "arguably the worst" for 60 years, he was widely derided, so I was interested to read the following in the Bank of England's financial stability report, which was published last week:
	"In recent weeks, the global banking system has arguably undergone its biggest episode of instability since the start of the first world war".
	We are talking not about 60 years but about almost a century.

John Redwood: Does the right hon. Lady think that the Chancellor was wise to make his moral hazard speech in September 2007, in which he said there would be no support for any bank, and that it served the banks right if they got it wrong?

Ruth Kelly: We have all learned lessons during this credit crunch crisis and its implications. A natural fear of moral hazard at the emergence of the tightening of credit conditions has turned to a preoccupation with trying to fend off a global slump, as the reality of the impact that a severe credit crunch can have on the economy has dawned.
	The seeds of the crisis can be traced back to the development of current account and trade imbalances over the past decade, fuelled by financial market liberalisation and abolition of capital controls in the late 1980s, one symptom of which was the unfettered access of businesses and individuals to credit. Of course, many businesses and individuals are perfectly good credit risks, and not for a moment would I suggest—I hope that few Members of this House would suggest it—that we should roll the clock back to the days when individuals and businesses were denied credit lines.
	The soaring of current account surpluses in Asia led to low global real interest rates, which, combined with cheap exports, created downward pressure on inflation. The consequence was a sharp increase in borrowing in a number of countries, including the United Kingdom, partly financed by the inflows of foreign capital lending. As we all know, that was accompanied by the greater integration of capital markets, an increase in risk, a reduction in transparency and an explosion in credit derivatives as a response to the huge market in securitised assets. Credit derivatives were supposed to make securitisation less risky, but they ended up making it far riskier.
	As a result of that global interdependence—between banks and between banks and other financial institutions —the global system became particularly vulnerable to any shock. The immediate shock in this case were the losses in the US sub-prime mortgage market. Those losses made credit derivative contracts prohibitively expensive, securitisation ground to a halt, and banks became fearful of lending to each other and fundamentally reassessed each other's creditworthiness. Overnight lending dried up and this systemic risk was noticed and perceived not just in one country but across boundaries.
	That was the beginning of the real credit crunch—when it started to bite; the market turmoil; the halving of the capitalisation of world stock markets; the losses of $2.8 trillion, which are now being felt with dire consequences for businesses and individuals; and, of course, the risk of a global slump.
	In such circumstances, I would argue that the urgent need was for bold action to get the inter-bank market moving. I apologise for not taking up the proposition of my right hon. Friend the Member for Airdrie and Shotts as an automatic conclusion, and for not dwelling at length on that issue. As has been acknowledged, he was right to concentrate on that fundamental weakness in the system, but capitalisation and the degree of capital injected into the system were key ingredients in confidence. My right hon. Friend the Prime Minister and my right hon. Friend the Chancellor were, I think, right to take bold and urgent action to re-inject capital into the banking system, to inject liquidity and, of course, to institute the guarantee of inter-bank lending. We might need to reassess whether that guarantee is working, but I certainly would not jump to the conclusion that it was not being taken up and that that was a clear sign of failure: far more important is the price of inter-bank lending, which, of course, as my hon. Friend the Exchequer Secretary said, has fallen recently.
	The Bank of England is to be congratulated on its bold move to cut interest rates by 1.5 per cent, although many of us might wonder whether it did so soon enough. My right hon. Friend the Chancellor, too, should be congratulated on persuading the banks that they should pass the cut on to mortgage holders. It remains to be seen whether any further cuts in interest rates will have the same impact on personal lending rates.
	What about fiscal policy? It is absolutely right that the key macro-economic question, rather than the one of inter-bank lending, is whether there should be a fiscal stimulus. It is clearly right that borrowing should be allowed to rise during a recession, because accommodating an increase in benefit bills and a reduction in tax receipts will naturally lead to an increase in borrowing. I am glad that the official Opposition have now made up their mind that it is right to allow borrowing to rise and automatic stabilisers to be used during an economic downturn.
	The big debate is whether there should be a discretionary fiscal stimulus or loosening on top of the use of the automatic stabilisers. The judgment on whether there should be an additional fiscal stimulus seems to depend on whether we think that foreign investors will have confidence that we are not going to default on our debt, and, in particular, on what will happen to long-term interest rates. For any fiscal stimulus to be effective, it must be seen to be temporary. Were the Government to embark on such a venture, they would also have to plot a clear path back to a more sustainable or more balanced position.
	Such a move would be much more effective if it were co-ordinated internationally, rather than it resulting from unilateral action. When I look at the figures for the deficits and the public sector net debt as a share of GDP, I find it hard to accept that the markets would not think that the UK was a pretty good bet that could tolerate the running of a pretty large fiscal deficit for a while.
	I do not know how the Opposition explain the fact that public sector net debt, relative to GDP, is the lowest of any single major industrialised nation other than Canada. Of course, there is Northern Rock. The right hon. Member for Wokingham (Mr. Redwood) shakes his head. I think that the nationalisation of Northern Rock was essential, but the question is not what the level of deficit is but what the level of public sector net debt was when the situation began.
	According to the Office for National Statistics, public sector net debt was significantly lower than the level that we inherited in 1997. In fact, I clearly remember sitting in this Chamber when my right hon. Friend the Prime Minister, as Chancellor of the Exchequer, explained that he had used the telecom spectrum receipts to repay more debt in one year than had been repaid in the previous 50 years combined. Frankly, it is not surprising that we enter this downturn with a pretty good and sustainable debt position, which should enable us to take any action necessary.
	The Government must hold their nerve, continue to be bold and take the action required in the short term, but they must also think hard about the longer term international action required to put in place a new set of global rules to try to minimise the recurrence—or the likelihood of a recurrence—of a global credit crunch. My right hon. Friend the Prime Minister, with the Chancellor, is leading on reforming the international financial system and has argued for a long time for the overhaul of credit agencies. He argues, too, that the global system should offer countries incentives to behave well, and that international macro-economic action is required to stave off a global slump. In such circumstances, the premium is on being bold and taking the action required, and I think that the official Opposition will rue the day they decided to be so timid.

John Howell: The Exchequer Secretary referred earlier to the benefit of hindsight, but the benefit occurs only if we are prepared to learn the lessons. There was enough evidence to be able to spot the crisis coming. The International Monetary Fund identified 64 banking crises around the globe between 1970 and 1999. It showed—as did other studies—an overall pattern in each of the crises, starting with lax lending, preceded always by a lending boom. The lending was on risky assets, which were often politically directed for social purposes. The result was unusually exposed institutions and unusually exposed risks.
	The second element in the structure of those crises was that banks and regulators were overstretched—to be charitable—by the volume of business, or regulators simply believed what the banks told them because they were not ready for the risks that were coming along. The third element was that at the time no one was interested in curtailing the level of debt, because they could not see that it was in their interests to do so. Each crisis led to a change of behaviour and of attitude, where reckless lending was described as bold and rewards for risk takers increased beyond the risk involved.
	What burst the bubble was different in each case, but it is absolutely right to ask why the Government did not recognise that sequence, which had already been set out by the IMF and in a very easy to read article published in  The Economist three years ago. One is tempted to answer the question by saying that the Government were so confident that they had ended boom and bust that they did not believe it would happen in the UK; they had actually started to believe the spin of their fiscal rules.
	Many Members have mentioned the international situation. I have been involved in projects that helped to introduce financial institutions to the global market, and it is right to say that the global nature of the market makes the situation more difficult. It is thus absolutely right to call for the sort of international action on regulation and transparency that my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) proposed in his speech. However, despite the international relationships of financial institutions and products, the major issue in surviving such a crisis is the strength of national economies. To see the situation as nothing more than a contagion from abroad is fundamentally to misrepresent it, and fails to distinguish the contagion of the disease from the contagion of knowledge of the disease. For example, the latest US research into the sub-prime market shows that what did for Fanny Mae and Freddie Mac was not that they had caught the sub-prime disease but that everyone thought they had caught it. That is what burst the bubble—a domestic situation and a domestic issue of confidence.
	A crisis such as this needs domestic material to work with, and there is plenty in the UK. When UK financial institutions rapidly expanded from lending on the basis of short-term wholesale market borrowing, they created a mismatch that was asking for trouble. The debt boom and the Government's role in it extend beyond the simple fact of debt. Other Members have already commented on that, so I shall say no more about it. However, it fed into a state of mind.
	Three of the conclusions in the Federal Reserve Bank of New York's study on the sub-prime issue drew out some general points that are relevant now. The problems the study identified were a convoluted loan product system that consumers did not understand, a credit rating system that did not do a good job of highlighting the risks and a lack of incentives for institutions and Government organisations to carry out research into the risks.
	On the first of those conclusions, the Government are complicit in convoluted loan programmes that consumers do not understand, such as shared appreciation mortgages, whereby banks recoup the cost of a mortgage—by huge percentages of capital—when the house is sold or the mortgagee dies, leaving people with insufficient equity to move on. Such mortgages were unveiled—believe it or not—as a millennium product by Lord Mandelson, in his first incarnation as Trade Secretary. The lack of incentives for institutional investors and Government to carry out their own research must lie behind the failure of the regulatory system.
	I have spoken before about the lack of credibility in the fiscal rules, but their underlying weaknesses are why they are so flaky. The weakness lies in the assumptions on which the rules were measured—the variations in determining the amount of debt, what constitutes debt and the length of the cycle—and in the fact that the Government did not stick to them. The rules were too vague. What they were not was an operational rule, and it is doubtful whether they could be. They were too simplistic to guide policy and too open to be easily manipulated.
	What activity do we want? We need to allow Parliament to debate and monitor more closely the Government's fiscal performance, which is why I wholly support the creation of the office of budget responsibility that my hon. Friends on the Front Bench have suggested in several debates.
	It is a great shame that much of the speculation in the papers about incentives and stimulus has concentrated on amounts rather than on quality. There has been massive financial disruption, so the priority is rightly to sort it out rather than to argue about general fiscal stimuli.

John Redwood: My hon. Friend is making some important points. Has he seen the work of our hon. Friend the Member for Braintree (Mr. Newmark), who believes that true Government indebtedness, including pension liabilities, is now £1.8 trillion—120 per cent. of gross national product—which is why some of us are worried about the country's financial position?

John Howell: I am grateful to my right hon. Friend for making that point. He is absolutely right: a number of factors have not been taken into account—the pensions element is one, and the whole business of private finance initiatives is another. That is why it is crucial, as I said, to recognise that although the rules are too vague and flaky, it is not the rules themselves that cause the problems but their underlying assumptions. We can all make nice big rules, but if the assumptions and the data behind them are not accurate, there is no point in having them.
	We must look at the quality of any proposed stimulus. I was interested to hear that the hon. Member for Twickenham (Dr. Cable) has three favourite words to describe the quality of a stimulus. I have my favourites, too. The first is that the stimulus needs to be "effective", which means that we must know what it will achieve and when. Secondly, it needs to be "temporary"—as the right hon. Member for Bolton, West (Ruth Kelly), who is no longer in the Chamber, mentioned—so that it does not worsen the structural deficit. Thirdly, it should be "efficient", so that the outcomes yield value. However, we must be cautious about any temporary fiscal easing so that we make sure that it is capable of being swiftly and credibly reversed.

Kelvin Hopkins: I am pleased to have an opportunity to speak in this important debate, but I do not think that we should give the Liberal Democrats quite so much credit as some hon. Members have done. I remember not so long ago when the Liberal Democrats were signed up as hard-liners to the neo-liberal project, the same as the Front Benchers of the two major parties. I never signed up to that. Indeed, the Liberal Democrats not so long ago had an orange book putsch in their party that was a victory over the minor group of social democrats who remain from the days of the past. Just recently, they have rediscovered little bits of social democracy, but just because they are dipping their toe into the water does not mean that they have been fully converted. I, for one, remember what they used to be like and do not give them too much credence for what they are saying now.
	I was complimented by the now leader of the Liberal Democrats in a debate on Europe some three years ago, when he said that I was the only hon. Member to propose a coherent alterative economic strategy. He said that it was a socialist strategy. He did not agree with it, but he said that I was at least the only one who had a coherent alternative. I like to think that I have stuck with that coherent alternative throughout my time as a Member. Indeed, when I first entered the House, I said in my maiden speech that I had come here among other things to oppose neo-liberalism. At this point, I have been proved right: neo-liberalism has led to an appalling world crisis. If we had had greater regulation, particularly of the financial sector, and retained larger components of public ownership of the utilities, a larger state sector and more general economic controls, we would not be in this situation.

John Hemming: I share the hon. Gentleman's concerns in respect of the regulation of the financial services institutions—I declare my interest as a shareholder in some of them—but why does he think that the utilities are key in the financial crisis?

Kelvin Hopkins: I have always felt that a significant state sector, as we had until some 30 years ago, was useful not just because it provided the public with a good deal, but because it was a component of economic management and brought a considerable amount of income into the Treasury. The mixed economy that we used to have worked very well. The instabilities have taken place since we started to dismantle that and to put everything into the private sector and the market, and I think that we will see a reversal of that. In fact, if I had said in the debate on Europe, when the now leader of the Liberal Democrats was so kind to me, that I believed that the Government should take a substantial stake in the banking sector and start to arm-twist the Bank of England to reduce interest rates, and that a Chancellor would tell the banks and building societies to reduce their lending rates and pray in aid the name of J. M. Keynes, he would have thought that I had gone mad. However, that is precisely what has been happening in the past few weeks, and I am very pleased that it has been.

John Horam: As the hon. Gentleman says, the Government and the Governor of the Bank of England have been trying to persuade the banks to lower their interest rates in line with a cut in the general interest rate in the past few days. Curiously enough, the bank in which the state has one of the biggest says—the Bradford & Bingley—has stopped lending altogether. Is it not better in fact to have a properly regulated system, rather than a state-controlled system?

Kelvin Hopkins: The two could easily go together. Indeed, the rate that is charged to existing borrowers and whether one is extending borrowing are two issues. I would want to ensure that both of them are positive in helping the economy. Nevertheless, the reduction in interest rates last Thursday will make a significant difference to the disposable income of the existing mortgagors and borrowers, of whom there are millions, who have been paying interests rates that are too high. That will put a significant stimulus into the economy. I welcome that very much indeed.
	I return to the theme that I have raised many times in the House: the Government ought to retain control of the levers of economic management, which are several, but I shall mention the three main ones, the first of which is interest rates. I was an opponent of giving the Bank of England so-called independence. Interest rates should be controlled by the Government, who should be accountable to the House for their policy on interest rates. I have always thought that, and I think that it is the case now. Interest rates should not simply be geared to the inflation rate. Indeed, the Government are now saying that the Bank of England should consider the wider economic impact of changes in interest rates, not just inflation. If the Bank had been looking at inflation, which is currently and temporarily quite high, we would not have seen that reduction in interest rates last Thursday. I am glad that the Bank is now looking at the wider economy and acting appropriately.
	The danger indeed is not inflation, but deflation, which is much harder to deal with than inflation. If prices start to fall, which happened in Japan, arresting a fall in prices is very difficult indeed. People anticipate falls in prices and therefore abstain from spending until prices have fallen further, which generates a vortex of deflation and a downward spiral into slump. We must avoid that, and anyone who looks at the situation now and urges caution in Government spending or the fiscal stance is gravely mistaken. We are still in a very difficult situation, and I want to ensure that unemployment does not rise and that living standards do not fall, as is possible if we were to move in that direction.
	Another lever that the Government have wisely kept control of—to an extent at least—is the exchange rate. I applauded the Prime Minister when he decided as Chancellor not to enter the exchange rate mechanism. He kept control of our own currency, as a lever of economic management, and rightly so. Of course, the problem was that, after 1997, sterling appreciated substantially. That was a big mistake. I was one of those who supported the ideas of Gerald Holtham, who had been the director of the Institute for Public Policy Research and who said that we ought to intervene in the international money markets to bring down the value of the pound, because sterling was overvalued. If hon. Members want evidence of how overvalued it was, they should look at our structural trade deficit over the past many years.
	We should have intervened to reduce the value of our currency relative to other currencies and avoided the situation that we are now in, with record trade deficits. Okay, that will have an effect on what we buy from abroad. I like a good bottle of French wine, for example, and I might have to pay more for it. What a terrible shame. It is appropriate that we ensure that our currency value is correct and suits our internal economic needs. If the pound depreciates, it deflects demand to home products and home producers, and it keeps the demand in our domestic economy high. That is what we should be doing now. I welcome the fact that the pound has been depreciated significantly in the past year, and I hope that it stays down and is managed to stay down for some time to come.
	Of course the third lever is spending and taxation. Perhaps we have not taxed enough. I would not say that we have not spent enough—we should have spent more—but we certainly have not raised enough in taxation while we have been spending over the past few years. I have said in the Chamber on a number of occasions that we should have raised taxes, particularly on the rich. I have also suggested that the Government should make greater efforts to collect all those taxes that are avoided—£33 billion-worth, according to the TUC's recent booklet. We should do more to avoid tax fraud. Tobacco smuggling and VAT fraud account for another £14 billion. There is money to be had, and the Government could rake in at least some of it if they made greater efforts. Even if they raked in 30 per cent. of it, it would make a significant contribution to the Exchequer and enable us to sustain public spending where it needs to be maintained.
	We should not be trying to restrict the fiscal balance; we should be worried above all to ensure that there is enough spending power in the economy to sustain employment in this very difficult time and to avoid above all going into a slump. That is a serious danger now. There has been talk about why the banks are still nervous. They are still nervous because there is still a lot of toxic debt around and they do not quite know where it is. The banks are nervous about lending to one another, because they do not quite know how much toxic debt each one has got.
	We have to make sure that the Government sustain the banking sector, and that we get through this difficult period. There is still the problem of toxic debt, and many hidden problems in the banking and international finance sector; we have to find our way through that, even if it means having a bigger state sector and more regulation. I must say that I applaud what my right hon. Friend the Member for Airdrie and Shotts (John Reid) said about international regulatory machinery. We are going back to something like the Bretton Woods agreement; we are starting to talk seriously about regulating the international finance sector, instead of leaving regulation to the financial markets and people who gamble with our lives—our money—for their own benefit. It is interesting that Nick Leeson, who went to prison for gambling with Barings bank's money to the extend that it went bankrupt, complains that people who do the same sort of thing now are just bailed out. We ought to look at that. We should make sure that those people do not get hold of our economies and our lives again. If we have to extend the public-sector part of the banking and financial institutions sector, so be it.
	I urge my Front-Bench colleagues to use all the levers of macro-economic power to make sure that, above all, we avoid a slump and build our way out of the obviously difficult recession approaching us. I have been unapologetic about my support for traditional Keynesian policies, for a degree of intervention in the economy, and for having a substantial public sector as part of an economy that can be managed by the Government. I am against leaving everything to the market.
	Keynes and others said that the market, when left to itself, tends to redistribute income from the poor to the rich. That is inherently deflationary, because rich people save more of their money, and poor people tend to spend it. If one wants to keep an economy buoyant, one has to make sure that poor people have enough money in their pockets to keep it going. If one gives it all to rich people, they put it in banks, save it, or put it in offshore accounts, and they deflate the economy. Redistribution and intervening actually help to keep economies buoyant, maintain employment, ensure a decent life for working people and bring about a high level of social justice, which is what most Labour Members have spent their lives fighting for. Obviously, I will vote with the Government tonight against the Liberal Democrats, but I hope that, in their new-found enthusiasm for social democracy, the Liberal Democrats continue to move further to the left, and eventually become socialists.

Alan Reid: In view of the hon. Gentleman's speech, surely he should vote with us, because our motion calls for a reduction in taxes for people on low and middle incomes, and refers to plugging the tax loopholes used by the rich. Surely that is redistributive, so I am disappointed that the hon. Gentleman is not voting with us.

Kelvin Hopkins: I did say at the beginning of my speech that I was not convinced by the Liberal Democrats' recent conversion to a little bit of social democracy. My tax changes would go a lot further than those suggested by the Liberal Democrats. I suspect that the motion is a little bit about courting the electorate before the next election, and is not to be taken too seriously.

Susan Kramer: It is always an honour to follow the hon. Member for Luton, North (Kelvin Hopkins). We are getting a blend of the 18th and 21st centuries in speeches tonight, and that is always a pleasure. I want to pick up some of the issues that have been raised and perhaps to take them a little further. I was very interested in the speech made by the right hon. Member for Airdrie and Shotts (John Reid) about the inter-bank market. He proposed that the central banks create an exchange that takes account of party risk for banks on either side of the inter-bank market. I just want to point out possible fundamental flaws in that approach. That is not to say that we should not explore it; however, it might not be the palliative that it appears to be at first glance.
	As hon. Members will know, there are already exchanges within financial markets—an example is the futures market—that take different kinds of counterparty risk. However, they do it by having margin pools. In other words, they require parties to pay ahead of their due dates, if that is the easiest way to describe it, in order to limit their exposure to the counterparties on either side. If an exchange takes the full credit risk of the counterparty for the banks on both sides of a transaction, the encouragement given to banks to make an irresponsible decision is quite extraordinary, because the transaction is protected by the exchange that stands in the middle. That is almost like saying that the package put together by the British and other Governments to come to the rescue of banks should not only be placed on a permanent footing but should be of a size and proportion that would, in effect, cover the whole banking market. That is a degree of exposure that we cannot possibly underwrite and undertake.
	For all of us, there is a sense of great failure in the fact that banking institutions have failed to assess the risk of the transactions with which they have been involved. Rather than relieve them of responsibility of ever having to assess that risk, we ought to require them to assess it. That is the direction in which we have to go; we should not basically say that central banks, and essentially Governments, will stand in the middle and take that counterparty risk.

John Hemming: I share my hon. Friend's concern about the proposals made by the right hon. Member for Airdrie and Shotts (John Reid). Does she agree that if we tried to establish a central body to take on the counterparty risk, the danger is that it would take on the counterparty risk for entities regulated in other European economic area countries? As a consequence, we would be taking on risks for places far beyond the UK—for Iceland, Estonia and so on.

Susan Kramer: My hon. Friend is right, and it strikes me as impossible for an international body to have sufficient grip on and be sufficiently responsive to the sort of transactions and changes made by individual banks all over the globe. Such an arrangement would also remove responsibility from banks—a responsibility that no Government or central bank should take.
	The right hon. Member for Wokingham (Mr. Redwood) talked about the imbalance in the UK economy. That has been a concern of mine for a long time. There was a general feeling that it was following the direction of the future, and not taking a risk, to allow developments in financial services and the various spin-off industries and businesses to become overwhelmingly dominant within the UK economy. However, there has always been a risk involved. For example, nobody in this Chamber, when considering their pension, would put all their eggs in one basket or all their money in one sector of the economy. However, we in this country have largely allowed ourselves to invest heavily in one sector of the economy, largely on the assumption that it would be immune from the cyclical patterns that we know exist in manufacturing and what we might consider to be the more traditional industries. We have discovered that financial services are no more immune than other sectors to inevitable cycles; they follow the patterns that have developed in other industries and sectors. We have put ourselves into the terribly difficult position of having only one major arrow to our quiver. We must avoid going in that direction in future.
	This seems an ideal opportunity for the Government to focus on developing the green industries that we need if we are to tackle climate change. Often, when I hear people talk about the economic recession—we are at the beginning of it—I find that they tend to feel we should abandon environmental targets and our work to tackle climate change because we have to give priority to getting the economy back into shape. They have always seen the two as being in conflict with each other. I have never believed that they are in conflict. This is surely an opportunity for the Government to use every mechanism possible to encourage those industries, for example by encouraging the development of new technologies that will reduce our use of carbon and new forms of energy. Work needs to be done on infrastructure, too. There is a whole range of activities that the Government could begin to develop and underpin. We have before us a great opportunity to channel investment into the future; we know that that is required if our children are to have a reasonable environment in which to live. I want to encourage the Government and to hear whether they intend to take advantage of those issues.
	We are all concerned about how the regulators behaved throughout the period leading up to our financial crisis. The notion that regulators behaved perfectly and the crisis developed despite them strikes me as extraordinary and naive, and work must be done to create a much more rigorous regulatory system.

John Pugh: Does my hon. Friend recognise that after previous bank crises, there was a demand for a modest amount of new regulation, but that there was no wholesale demand throughout the City or the political parties for better regulation until now?

Susan Kramer: I very much agree. There is suddenly demand for a lot of new regulation, but wise regulation might be better than simply stacking up layers of additional regulation. We must work out what needs to be regulated and how it would be most effectively done, so may I suggest one step in that direction? Members will be aware that the Parliamentary Ombudsman recently reached a verdict of maladministration against three of our most significant regulators in the case of Equitable Life, but the Government have not acted on that verdict. What better lesson could the markets, more broadly, and the regulators in particular, be taught than to live up to the terms that the ombudsman laid down, with an apology from every regulator to all those who lost out by taking pensions through Equitable Life, and the payment to them of the full compensation that the regulator called for?

Robert Smith: My hon. Friend makes a very good point about the ombudsman's report on Equitable Life. It is disappointing that the Government have still not reached the point of saying sorry. Even then, they could develop the details for implementing the practical recompense. The Government have often prayed in aid the fact that it was a big report, but they had draft copies and knew where it was going. It should not have taken them so long to recognise that they needed to say sorry to the people who invested in Equitable Life.

Susan Kramer: I very much agree. The ombudsman was very clear and, so that it was not too complex and difficult for the Government to grasp, made only two recommendations: one was the apology, and the other was a swift process for implementing compensation in full. When it comes to compensation for those who invested in Equitable Life, what once might have seemed like an extraordinarily large amount is lost to the right of a decimal point in the commitment of funds to resolve the broader banking crisis.
	Small businesses are very important in my constituency, and Member after Member has talked about the problems that small businesses in their constituencies have had obtaining credit, despite the Government's belief that they have from the various participants in their banking recovery plan the commitment to keep lending to small businesses at 2007 levels. One particular group in my constituency has been suffering, and its situation indicates the depth of the problem. This group, traditionally, has not needed credit lines and therefore has no credit history. Today, however, the companies need credit because their customer base is starting to pay late, but because they have no credit history, the banks are closed to them. Tied to that is the issue of suppliers. I know that the Government have said that they will try to pay people in 10 days, but my hon. Friend the Member for Twickenham (Dr. Cable) asked for much more detail about exactly what that means, how it will play out, and whether it will apply to quangos and related Government institutions, because the private sector is doing almost the opposite.

Lorely Burt: We all commend the Government's approach, and the 10-day period should be passed on. Indeed, in my constituency we are trying to persuade the local authority to adopt the same approach, but does my hon. Friend agree that when the Government pay within 10 days, it is very often to larger suppliers that are not necessarily in the same financial difficulty as small suppliers at the bottom of the supply chain? Does she agree also that the Government should make their 10-day payment conditional on the same payment going down the supply chain—the same conditions, right the way through—to small suppliers, too?

Susan Kramer: I very much agree. There is a fundamental flaw in many Government contracts, because they are designed so that only the large entity can bid on them; they are not examined to try to find ways they might be bid on by relatively small businesses to stimulate new enterprise. In that context, several private companies—Tesco is the name that comes to mind—are going not from 30 days to 10 days but in the other direction, and, I understand, adding another 30 days to the payment period. Very powerful entities, such as the major supermarkets, need to feel some heat from the Government to join them in their approach.

Lorely Burt: Suppliers to another company, Boots plc, can actually wait more than 100 days before it is required by its own changed rules to pay up. My hon. Friend talked about regulators. Does she agree that we should ask the Government to task regulators to ensure that such big plcs fulfil their reporting requirements, because they are required to name in their annual accounts their terms of conditions? It is time, I believe—

Mr. Deputy Speaker: Order. I know that these are exchanges between colleagues, but I ought to say to the hon. Lady that they are very long interventions that are eating into her colleague's limited time.

Susan Kramer: Thank you very much, Mr. Deputy Speaker. I shall quickly draw my comments to a close. I want to make only a few more points.

John Hemming: Will my hon. Friend give way?

Susan Kramer: Of course.

John Hemming: I thank my hon. Friend for giving way as we move towards 6.30pm. Does she think that the Government should review the insolvency laws and examine the chapter 11 experience in America because of the difficulty that companies could face in a tight credit situation, whereby, owing to payment delays, they face legal action to be wound up? Perhaps chapter 11 is something that we in the UK might consider.

Susan Kramer: My hon. Friend makes a pertinent comment and an important recommendation. Having worked in the United States for 18 years, I am conscious that chapter 11 often allows companies to continue and to be restored to health. We have not followed that mechanism in the UK, and I find that surprising, so the situation under discussion is, as my hon. Friend says, a good opportunity to make that change.
	Finally, I am particularly disturbed by the banks' dismissal of the Government's recommendations on the current bonus culture and of the public's outrage at its continuation. Members often feel that the reason why there is a problem with the bonus culture is that the sums of money are so utterly outrageous. At a time when the Government are coming to the rescue, the numbers seem almost immoral, but there is a deeper problem with the bonus culture in our institutions.
	The Government know that many bankers at a variety of grades are paid exactly the same salary and that most of their income is from bonuses, which have always been tied to short-term performance. The problem is that when somebody makes a sensible decision, recognises risk and refuses to take it, they lose out on bonuses and rewards, whereas the person at the desk next to them who takes that extraordinary risk gets the great bonus. When that persists year on year, we end up with a culture in which not only do we reward risk-taking but we penalise people who make the appropriate decision and identify and begin to recognise both risk and systemic risk. We must turn the whole picture upside down if we are to have a healthy banking economy.

Jeremy Browne: Thank you, Mr. Deputy Speaker, for calling me to conclude the debate. My hon. Friend the Member for Twickenham (Dr. Cable) kicked off the debate in a typically thoughtful and insightful way, and no doubt his speech was of interest to all who heard it. My hon. Friend the Member for Richmond Park (Susan Kramer) later made a similarly insightful and interesting contribution.
	As my hon. Friends have dwelt in such depth and detail on a lot of the salient points at issue, I will concentrate slightly more on the political response to what in recent months has indeed been an unfolding economic crisis, as the title of the debate suggests. This debate is extremely timely because the economy is shrinking, unemployment is rising and tax revenue is falling. The backdrop to the debate is the issue of how that happened. Two arguments have been advanced by the two main parties. The Prime Minister's essential take on the current situation is that it is all the fault of sub-prime mortgages in America which have contaminated our domestic economy—an economy that in other circumstances would have been just fine. As has been reiterated by the hon. Member for Henley (John Howell) and others in this debate, the Conservatives' take is different: they say that the problems are the Prime Minister's fault as he grew a bubble of personal and public debt in Britain.
	In a spirit of generosity, let me say that both sides are half right; they have identified the twin causes of a grave situation. As my hon. Friend the Member for Twickenham said, there have been international factors beyond our immediate control, but in many ways they have been made worse by how the Government have prepared the country for this situation.

John Redwood: Will the hon. Gentleman tell us how much more tax somebody on £50,000 a year should be paying, according to Liberal Democrat theories?

Jeremy Browne: The right hon. Gentleman can be assured that they would pay less. Let me get to the party political dimension, because I know how much he enjoys that aspect of things.
	The Labour Government have not prepared us well for the current situation. As the right hon. Gentleman said earlier, the Government allowed private debt and house prices to soar to unsustainable levels, failed to make prudent assumptions when setting budgets for the public finances and were painfully slow to respond to rapidly changing economic circumstances earlier this year. As the Minister said, it is easy to make such observations in hindsight; it is much harder to make them in advance. That is why my hon. Friend the Member for Twickenham deserves such credit and admiration, because he did precisely that. The Minister spoke for half an hour, but at no point did she address the salient point made about her response in the House to the economic crisis earlier this year. She was completely dismissive and high-handed about the warnings that my party was offering, free of charge, to the Government. If they had listened at that point, they might have been better equipped to deal with the current situation than they have been so far.
	I am afraid that the Conservative party has gone through a terribly difficult period; the past few months have been a painful humiliation and a case study in hubris for what was once a great party. It is hard not to wince when recalling the cluelessness, opportunism and inconsistency that has come from those on the Conservative Front Bench. Earlier, the shadow Chief Secretary to the Treasury, who is no longer in his place, made a partisan speech, but he was the one who got his party's uncertain start under way when he made his now infamous observations on borrowing. In one interview, the hon. Gentleman said both this:
	"Increasing borrowing is not a strategy for dealing with the recession",
	and this:
	"To increase borrowing to deal with an economic downturn—that's a perfectly sensible thing to do."
	That was not an auspicious start, but to be fair the hon. Gentleman is only doing the bidding of his political master, the hon. Member for Tatton (Mr. Osborne).
	Unlike many of his own Back Benchers, I do not wish the shadow Chancellor any misfortune. I have followed the career of the Conservative child prodigy with a benevolent interest, and it gives me great sadness to say that at every single juncture of this economic crisis he has been found wanting. Let me illustrate the point. My hon. Friend the Member for Twickenham has led the debate on interest rate policy. We have already heard what the shadow Chancellor said in the House about interest rates in response to my hon. Friend the Member for Richmond Park less than a month ago:
	"I do not think that it is particularly sensible...for politicians speaking from the Front Bench to call on the Bank to cut or increase interest rates. Indeed, I make it a practice not to comment on them."—[ Official Report, 14 October 2008; Vol. 480, c. 708.]
	I am going to chronicle the terrible unravelling of the shadow Chancellor's credibility on the issue by referring throughout to that reliable journal,  The Daily Telegraph. Initially, there was a false start, because just two weeks after the shadow Chancellor made his comment in the House, the headline that confronted me as I opened the newspaper was "Osborne admits his mistake". I thought that progress had been made, but soon found out that the headline referred to a completely separate catastrophic error of judgment by the hon. Gentleman. However, I had to wait only a further 24 hours for the  Telegraph headline: "George Osborne: Slash interest rates to drag Britain out of economic nosedive".  [Interruption.] The hon. Member for South-West Hertfordshire (Mr. Gauke) says that the shadow Chancellor did not say that. However, I took the trouble of reading the article, which contained quotations attributed to the shadow Chancellor—they may have been written by him or by one of the teenagers in his office. One of the quotations stated that
	"there is plenty of scope to stimulate demand with lower rates".
	That is what the shadow Chancellor said, having told the House that it was his practice not to comment on interest rate policy. He is struggling to keep up; he is a follower, not a leader.
	Hon. Members do not need to take my word for that, as it is the judgment of the shadow Chancellor's own admirers. Only a week after the article that I mentioned appeared, on 7 November, there was a  Daily Telegraph headline that will cause sadness on both sides of the House. It read, "Support for George Osborne collapses". I did not say that, and neither did Labour party Members—Conservative party supporters did. Anybody who thinks that last week's cut in interest rates was a dramatic percentage fall needs to see the shadow Chancellor's credibility rating. In one month, his approval rating has fallen from 70 per cent. to 2 per cent., which is a mark of how well the Conservative party has responded to the economic crisis. The article went on to describe the sheer horror of the hon. Gentleman's position. It said, "Only Caroline Spelman"—an extremely inauspicious start to any paragraph about a politician in trouble—

Mr. Deputy Speaker: Order. The hon. Gentleman is in danger of breaching the custom of the House to refer to right hon. and hon. Members not by name but by constituency, or so to paraphrase remarks so that actual names are not used.

Jeremy Browne: I am grateful, Mr. Deputy Speaker, although I should say that I was quoting directly from  The Daily Telegraph. I return to the quote: only the hon. Member for Meriden (Mrs. Spelman),
	"the Conservative Party chairman who has been sidelined over allegations she paid for her children's nanny from parliamentary funds, has a worse rating than Mr Osborne"—
	the hon. Member for Tatton, I should say. The clincher came when the article went on to say that
	"the Shadow Scottish Secretary who is barely known outside Westminster, is higher than Mr Osborne."
	That confirms the wisdom of the immortal Mark Twain quotation:
	"It is better to stay silent and look a fool, rather than speak and remove all doubt."
	It has been a sad period for the Conservative party, which has rarely looked more foolish.
	We have to remember that the Conservatives' flagship economic policy, which enabled them to look both ways and tell completely different audiences that they were on their side, was to share the proceeds of growth. It was launched against a backdrop of sunlit trees by a leader who told us, from the beneficial standpoint of lifelong security in terms of his own finances, that GWB—general well-being—was more important than GDP. How much the rhetoric of Conservative Front Benchers has changed since then.

David Taylor: I counsel caution when speaking in this Chamber. I once said that economics could not have been on the curriculum of the minor public school that the shadow Chancellor attended, and within minutes I had received a flurry of abusive e-mails. Will the hon. Gentleman have time to reach the worst quote of all from the shadow Chancellor—that the function of financial markets is for people to make loads of money out of the misery of others?

Jeremy Browne: The hon. Gentleman sets me a very difficult challenge, which is to chronicle in 15 minutes absolutely every inappropriate remark made by the hon. Member for Tatton. I am concentrating on some of the particular lowlights. It is a depressing experience for all of us who want to see a young man do well in politics. He is very enthusiastic, and his reputation was extremely good, but we are now witnessing a very difficult period for him. However, that is how the Conservatives have positioned themselves. They wanted to share the proceeds of growth, seeming never to have considered that there may not be any growth to share the proceeds of. One can only infer that the logical conclusion is that they now want to cut spending and increase taxes, which would be the flipside of that—in other words, sharing the pain of negative growth.
	The other policy that the Conservatives have been giving us a cast-iron promise to put in place is to match Labour's tax and spending commitments. We are now in an unhappy position whereby Labour's tax and spending commitments are not quite as impressive as the heir to Blair—the leader of the Conservative party—clearly originally thought that they were. Only yesterday, there was an unseemly clamour in the Sunday newspapers for Labour and the Conservatives to position themselves much closer to the commitments made by my hon. Friend the Member for Twickenham and the Liberal Democrats.

Steve Webb: The suspense is too great for me to wait to see whether my hon. Friend is going to come to another example: when fuel prices were rocketing, the shadow Chancellor promised to cut fuel duty to keep things fair. Does he agree that the logic of the Tory position is that we should now be jacking up fuel duty to keep things fair?

Jeremy Browne: That is another extremely well-informed intervention. What the Conservatives did—I suppose that it is only fair given the lack of experience on their Front Bench—was rush into panic mode when they thought that there would be an opportunity for a quick hit when prices for unleaded petrol were going up to 110p or 112p a litre. My party had a reasonably detailed conversation about the Conservative proposal, concluded that it was completely potty, and therefore decided not to support it. We were well advised in that, because now the Conservatives, keen to tell everybody their policies, will be putting out leaflets, inappropriately called "In Touch", in every constituency saying, "Vote Conservative—we'll put your petrol up by 5p a litre."  [ Interruption . ] It is 5p this week, and it could get a lot worse. The Conservative proposition is, "Vote for the same taxes as under Labour apart from more on petrol." That is not a particularly impressive piece of positioning.
	My message to Conservative Members who long instead for decisive and coherent leadership is this: "You do not have to remain trapped in the high-tax, wasteful spending box into which your shadow Chancellor has locked you. You can support this Liberal Democrat motion and show your constituents that you too believe in the values put forward by my party—effective public spending that offers real value for money, low interest rates to help struggling families and small businesses, and real tax cuts now for low and middle-income households, who need our help." Those are the right policies for Britain; they are Liberal Democrat policies, and they need to happen now.

Ian Pearson: Earlier this month, the International Monetary Fund reported:
	"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s".
	The Bank of England's recent financial stability report concluded that in recent weeks the global banking system had undoubtedly undergone its biggest episode of instability since the start of world war one. Even the dogs in the street know that the origins of the current financial and economic turmoil lie in the problems of the US sub-prime market and a record surge in oil and food prices. It does not wash with the British people to suggest that the problems we are facing are wholly or mainly the result of domestic policies, and the official Opposition have no credibility in attempting to suggest that.
	I am not pretending that there are no lessons to be learned—we have done so. That is why the Financial Services Authority is introducing its enhanced supervisory regime and why we have asked Lord Adair Turner, its relatively new chairman, to advise us on further reforms that might be necessary. However, the general public will find it difficult to take seriously the judgment of the official Opposition, who were against our actions on Northern Rock, who opposed the Banking (Special Provisions) Bill, and who would not have safeguarded Bradford & Bingley but who, in effect, would have let it go to the wall.
	I think that British people have welcomed our decisive action in leading and co-ordinating the efforts of Governments across the world to support the global economy through these very difficult times. At home, we have taken unprecedented steps to shore up the UK's domestic financial system, providing £37 billion of public money to some of our high street banks so that they can improve their capital positions. Through the Bank of England, we have made available more than £200 billion of Treasury bills to provide liquidity to the banking sector, and we have introduced a £250 billion credit guarantee facility to restore confidence and breathe new life into inter-bank lending. This support is crucial, because banks lie at the heart of our economy. We will do whatever it takes, despite the fact that the official Opposition do not support us, to ensure financial stability—to ensure that small businesses have access to credit and that home owners are able to re-mortgage when they have to do so.

John Redwood: When the regulator decided to increase the capital requirement for each bank in the system, did it calculate how much lending that would take out of the system and, if so, was it happy with that?

Ian Pearson: I will answer the right hon. Gentleman's question in a moment.
	We recognise that it is tough out there, and getting tougher, for hard-working families and small businesses, so we are targeting support at those who need it most. We are supporting households that are facing higher food and fuel bills by raising the income tax personal allowance for 2008-09 by £600, which is worth £120 to the basic rate taxpayer. All basic rate taxpayers will have seen that in their take-home pay from September. We have delayed the fuel duty increase from April this year to April 2009, saving businesses and families nearly £100 million every month, as opposed to the Tories' bungled policy, which would mean that people would now be facing a fuel duty escalator. We are making additional payments to the over-60s and over-80s of £50 and £100 respectively alongside the winter fuel payment, to the benefit of some 9 million households. We have announced a £1 billion package of energy efficiency measures, which means that all households will be able to save at least 50 per cent. on a range of practical energy-saving devices, for which 11 million of the most vulnerable households will qualify free of charge. We are offering financial support through the winter fuel payment, the Warm Front scheme and the expanded carbon emissions reduction target.
	Despite the global credit crunch, we need to ensure that the small firms that are vital to our economy have access to the loans and capital they need to let their businesses grow and develop. An announcement from the Chancellor at the end of last month means that Britain's small and medium-sized enterprises stand to benefit from up to £4 billion in loans from the European Investment Bank over the next four years. Based on the UK's shareholding in the EIB, British small businesses should be able to benefit substantially between 2008 and 2011. As a first step, UK banks have already signalled their interest in securing around £1 billion a year from the EIB.

David Gauke: If the Government are on small businesses' side, can the Economic Secretary explain why they are increasing the rate of corporation tax on small businesses?

Ian Pearson: It is always the task of the official Opposition to raise points that deflect us from the key issue. We are acting to help small businesses and to promote inter-bank lending. There were issues, as the hon. Gentleman well knows, relating to the way in which individuals set themselves up in business because of relative tax positions. That was one of the reasons we took the action we did, and we have debated the matter on many occasions. Moreover, the availability and active marketing of competitively priced lending to small businesses and to home owners is part of the conditionality agreements under the recapitalisation scheme.
	I shall deal with some of the key issues raised. I say to my right hon. Friend the Member for Bolton, West (Ruth Kelly) that we will continue to hold our nerve, and stay on the side of the British people during this difficult time. We in this country will work with others to help to reform the international financial system.
	My right hon. Friend the Member for Airdrie and Shotts (John Reid) raised an important issue. He is right that guarantees on inter-bank lending are only a temporary solution—they are specifically designed as such in response to the current crisis. He suggested that we ought to have an inter-bank market exchange, which would be a long-term solution to enable inter-bank lending in future. I would be happy to meet him and those advising him on these matters, along with my officials, because inter-bank lending is of fundamental importance—a point raised by a number of hon. Members.

John Reid: I thank my hon. Friend for that generous offer, which I will take up. I would like to make it absolutely plain that what I suggested was meant to supplement the measures taken by the Government. I congratulate the Government and I fully support everything they have done. Given the magnitude of the crisis, all of us in this House should be acting—as far as we can—to bring together our efforts to address it. I thank my hon. Friend for the spirit in which he accepted what I said, and I shall respond likewise.

Ian Pearson: I appreciate the constructive way in which my right hon. Friend set out his proposal.
	The Government's policy on credit guarantees is an important part of the overall financial package announced on 8 September, and progress has been made. Overnight LIBOR was 6.8 per cent. on 16 September; today, it is 3.2 per cent. The three-month LIBOR rate has declined over the past 10 days from 6.3 per cent. to 4.4 per cent. Contingent liabilities taken on through the scheme will be reported to Parliament through the usual winter and summer estimates process.

John Hemming: On the reintroduction of 150 basis points in the minimum lending rate, LIBOR went down by only 120 points. Does that not demonstrate the failure of some aspects of the Government's policies?

Ian Pearson: I would like to think that the hon. Gentleman supported our action on credit guarantees and welcomed the Bank of England's cut in interest rates. Some of these things will take time to work through the system, but the credit guarantees, the measures taken through the special liquidity scheme and the bank recapitalisation comprise a sophisticated package that has been copied by other countries around the world. We believe that it will have a hugely positive impact. We will, of course, keep all the policies under review, as we always do with such matters.
	A number of other points were raised, and I would like to address in particular the Liberal Democrats' tax proposal, which, as expressed by their leader on television this morning, was a sustainable cut of 4p, to make the rate 16p in the pound. I have not seen any real explanation of how the Liberal Democrats would pay for that. It would cost £19.2 billion per annum. If the Liberal Democrats propose to pay for the cuts by raising the higher rate of tax, it would have to go up to 52p in the pound. If they were to say, as they often like to, that the top earners on more than £100,000 should pay, a 26 per cent. increase in the top rate of tax would be required, taking it to 66 per cent. I am told by officials that that estimate does not take behavioural impacts into account. I am not sure how many high earners would remain in the country if they had to pay a 66 per cent. marginal rate of tax on income over £100,000. I am afraid that Liberal Democrat tax policies simply do not add up.
	The Government cannot and should not try to prop up house prices, but we recognise that volatility in the housing market can be a cause of great concern. That is why we announced a significant package of measures on 2 September, and it is why we will continue to consider what more we can do.
	On the contention that we did not fix the roof when the sun was shining, I remember the dog days of the Labour Government of 1974 to 1979. We were investing in fixing roofs even during those very difficult economic times. When we came to power in 1997, capital spending was less than half what we spent during that hugely difficult economic period. Since 1997, we have been able to more than triple in real terms capital spending in this country. We have not only fixed many roofs, but we have built new schools and hospitals, and improved the UK's transport infrastructure.
	We must not let the official Opposition con the British public into thinking that we have not fixed the roof—we have, and we have taken decisive action. What is more, we were prudent and sensible in running the UK economy. Since 1997, inflation has averaged 3 per cent., compared with more than 8 per cent. in the previous three decades. Long-term interest rates have averaged about 5 per cent., compared with roughly double that previously. That is how the Government have managed to triple public investment while cutting debt. It was not always easy, and we have had to make tough choices—for example, the decision to spend the £23 billion that we secured from the spectrum auctions not on public services but on reducing Government debt. That has put us in a strong position as we face difficult economic times. The Government want to show in our pre-Budget report the further steps that we will take on the side of hard-working people and small businesses in this country.
	 Question put, That the original words stand part of the Question:—
	 The House proceeded to a Division.

Mr. Deputy Speaker: Order. I do not know where the delay is greater, but it is too great, given that there is another debate to follow. I therefore ask the Serjeant at Arms to investigate the delay in the No Lobby, and then, if necessary, that in the Aye Lobby.

The House having divided: Ayes 58, Noes 303.

Question accordingly negatived.
	 Question, That the proposed words be there added,  put forthwith , pursuant to Standing Order No. 31 (Questions on amendments):—
	 The House divided: Ayes 289, Noes 216.

Question accordingly agreed to.
	Mr. Deputy Speaker  forthwith declared the main Question, as amended, to be agreed to.
	 Resolved,
	That this House notes that the Government's actions mean that the economy is entering a period of global downturn with unemployment, inflation and interest rates all much lower than in previous slowdowns, and with debt reduced from 43 per cent. of gross domestic product in 1997 to below 36 per cent. last year; welcomes the extra investment in public services and public servants that this has enabled to compensate for historical underinvestment both in infrastructure and services in every region; supports the Government's global leadership and action to tackle both the causes and effects of the financial and economic turmoil on an international level; welcomes the Government's timely support to protect financial stability and consequently depositors, business and the wider economy; further notes that as a condition of this support the Government has demanded support in turn for homeowners and small and medium size businesses; further notes the action that has been taken in the court system and through mortgage interest support to enable people to stay in their homes, and the provision of £360 million to help small and medium size businesses under the Train to Gain initiative; and further notes that Government action to support families, individuals and businesses across the UK through the tougher times ahead includes extra tax credits, cutting income tax, freezing fuel duty, further winter fuel payments and increases in Child Benefit.

Post Office Card Account

Mr. Deputy Speaker: Mr. Speaker has selected the amendment in the name of the Prime Minister. In view of the compressed time available for the debate and the number of hon. Members who have indicated their wish to speak, I am reducing the time limit on Back-Bench speeches to 10 minutes with the aim of securing as wide a representation as possible.

Jennifer Willott: I beg to move,
	That this House notes with concern the fact that the Department for Work and Pensions has written to Post Office card account holders informing them that the Post Office card account contract ends in 2010; further notes that Post Office card account holders, many of whom have made a conscious decision to support the Post Office by retaining their card account, are being instructed to take out bank accounts in order to receive benefits beyond 2010; expresses its dismay at the fact that the letter does not mention the fact that a replacement for the current card account is currently out to tender, or make any mention of other Post Office products or services; believes that this is a deliberate attempt to encourage people to switch payment to direct debit and remove the role of the Post Office; further notes the additional damage inflicted on the Post Office by the Driver and Vehicle Licensing Agency, which is currently sending out licence renewal reminders as part of a communications campaign which makes no mention of the Post Office; calls on Ministers in the Department for Business, Enterprise and Regulatory Reform to encourage Ministers in the Department for Work and Pensions to consider the impact on communities across the country if the Post Office card account is not renewed; and encourages all Government departments to make their services available through post offices in order to ensure that they have a viable future.
	The motion highlights the inconsistency between what the Government have said and what they are doing. One example of that is the fact that the Government amendment describes the title of the motion as "Removal of the Post Office Card Account". In fact, it is entitled "Renewal of the Post Office Card Account".

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Lady, but that is nothing to do with the Government. I am afraid it is a misprint that arose in the preparation of the Order Paper.

Jennifer Willott: Thank you, Mr. Deputy Speaker. It could have been a Freudian slip, but clearly it was not one of the Government's.

Peter Luff: It may amuse the hon. Lady to know that a recent response on the future of the post office network from the Department for Business, Enterprise and Regulatory Reform to the BERR Committee—of which I am a member—was headed "The Failure of the Post Office Network". The hon. Lady is not the only Member to encounter Freudian slips.

Jennifer Willott: There are clearly a number of ways in which the debate could be classified. However, there are also a number of inconsistencies between the Government's actions and their words. They said that they would sign new contracts for the replacement of the Post Office card account at the beginning of 2008, but it is now November, and we still do not even know who has won the tender. They said that the managed closure programme would ensure a viable future for the post office network, but Ministers have campaigned against post office closures in their constituencies while voting in favour of closures elsewhere. They said that they believed in the future of Royal Mail Group, while doing all that they could to run down the business. That business made a profit of £577 million in 1997, but, after a decade of what the Government describe as unprecedented economic growth, Royal Mail Group's profit was just £86 million in 2007-08.

Paul Farrelly: Many Labour Members are very concerned about the future of the Post Office card account, but I shall not be voting for the Liberal Democrat motion. At the time of the local elections in Newcastle-under-Lyme, the Liberal Democrats implied that they could save every post office, irrespective of whether it was uneconomic, whether the postmistress wanted to retire and whether anyone wanted to run it.
	May I ask the hon. Lady a question about consistency? Will she confirm that at a Liberal Democrat party conference not too long ago, her party voted in favour of separating Royal Mail delivery from the network, privatising it, and then subsidising the network whatever the cost of doing so?

Jennifer Willott: If the hon. Gentleman reads the motion he will see that it raises specific complaints, and echoes the wording of an early-day motion signed by a number of members of all parties. There is clearly support for the motion across the House.

Bob Spink: Has the hon. Lady an estimate of the number of additional post office closures that may result if the Government remove the Post Office card account?

Jennifer Willott: That is a very good question, to which I shall return later.
	The reason why post offices and Royal Mail Group have suffered such hits on their profits is that the Government are removing a wide range of services from the Post Office, while also trying to scare away the loyal custom that the Post Office already enjoys. In 2006, they announced that people could no longer pay for their television licences at post offices. In the same year, they told people who received their benefits and pensions through the Post Office card account that it was being withdrawn, and that they would have to open bank accounts to continue to receive their benefits. In 2008, the DVLA sent out reminder notices asking people to pay by direct debit, making no mention of the possibility of paying via the Post Office. Step by step, the Government are taking business away from the Post Office.

Robert Smith: This is a track record that dates from the start of the Post Office card account. People had to fight to open a Post Office card account: the Department for Work and Pensions put every possible barrier in their way, including a call centre that they had to telephone where attempts would be made to talk them out of it. People had made a conscious decision to use the Post Office because they wanted a nice simple way of getting their money. The Government tried to put all possible hurdles in their way, but millions of them chose the Post Office despite that, and they should be allowed to do so again.

Jennifer Willott: Opening an account was certainly a difficult option, and the positive response to the Post Office card account shows how important it is to a wide range of people.

Lembit �pik: Is this not a particular issue in rural areas? The post office really is the only service available to my constituents. The attempt to close post offices such as Abermule constitutes the wholesale removal of not just the Post Office card account but services which, although taken for granted in towns, are simply not available to rural residents who have nowhere to go except their local post offices.

Jennifer Willott: The hon. Gentleman is right. The issue that he has raised has been raised by other Members on both sides of the House, and I shall return to it later, because it is important.

Philip Dunne: The hon. Lady is being very generous with her time. Does she agree that if the Government made the woeful decision not to grant the new contract to the Post Office, that would be yet another nail in the coffin of the existing post office network? Would not the logical financial reaction of individual householders be not to use a replacement service, but to use cards from other banks in the Post Officebanks such as Alliance and Leicester, Bank of Ireland, Barclays, Cahoot, Clydesdale, Co-op, Nationwide, Lloyds TSB and Smile, some of which will in fact be owned by the Government?

Jennifer Willott: The range of services available at post offices is obviously relevant. It is clearly beneficial for people to be able to take advantage of other services at the post office. Nevertheless, it should be borne in mind that people want Post Office card accounts as well.

Michael Weir: The hon. Lady has mentioned difficulties in rural arrears. She will know that one of the companies bidding for the account is PayPoint, which took over the television licence. That has caused huge problems to people in rural areas who wish to renew their licences.

Jennifer Willott: That is true.
	Nearly all my speech is being made by other Members, so I shall make some progress now. I shall allow further interventions later.

Malcolm Bruce: Will my hon. Friend give way?

Jennifer Willott: I will give way once more.

Malcolm Bruce: First, PayPoint may have more outlets, but they are not as well distributed as those of the Post Office. Secondly, the Royal Bank of Scotland and the Bank of Scotland, which are about to become Government-owned, do not allow people to use cash at post offices. If we lose this service in Scotland, it will be a huge disadvantage to most people living in virtually every rural area in the country.

Jennifer Willott: The main problems clearly lie in rural constituencies and communities, although there are also difficulties in deprived urban areas where no choice between financial services is available.
	As others have pointed out, when the Post Office card account was established in 2003, despite the difficulties that people encountered in opening accounts, the initial contract was set to run until 2010. However, it was clear to all involved that it was expected to continue well beyond that time. By January 2006, not even halfway through the contract period, the Government had already decided to take the business away from the Post Office. Despite the early stage at which the decision had been made, this further step has been delayed and delayed.

Rob Marris: What is the evidence?

Jennifer Willott: The evidence is in a debate that took place in the House of Lords. There is plenty of evidence to show when the Government decided that the Post Office card account should be removed.
	The Government cannot get their act together, and apparently cannot make up their mind about the future of the Post Office card account. Others are doubtful about whether the Government really cannot make up their mind, or have already made the decision and are waiting for an opportune political moment at which to make an announcement.

Frank Field: Does the hon. Lady not think it somewhat ironic that the Government's only IT success in the past 10 years has been the Post Office card? Is not the fact that we are debating the possible scrapping of the card in its present form slightly surprising?
	I hope the hon. Lady accepts that if some of us do not join her in the Lobby tonight, it is not because we are not full of apprehension about the Government's stance. There may, unfortunately, be another occasion on which we shall have to use our votes.

Jennifer Willott: I certainly agree with the right hon. Gentleman's first point. As for his second point, I hope that those who support the motion will consider voting with us later to make that clear.
	As for the earlier point of the hon. Member for Castle Point (Bob Spink), there are estimates of at least 3,000 branch closures if the Post Office card account is taken away from the Post Office, although some suggest it could be worse, with 6,000 post office branch closures, which is more than half the current network.

David Heath: I hope Members do not decide that they cannot vote with us tonight, because they will not have another opportunity to express their support for their post offices. My constituency has already lost nine sub-post offices through the last tranche of closures, and sub-postmasters were ringing me throughout the past weekend saying how worried they were that the Government, having dithered for so long, are now coming to a conclusion that will take the contract away from the Post Office, and that that will have a disastrous effect on their businesses.

Jennifer Willott: It is, indeed, the case that the removal of POCA from the Post Office would lead to a chaotic and messy series of closures, and it would also entail a string of personal tragedies, as my hon. Friend highlighted, because the closures would be the result of sub-postmasters facing bankruptcy. They would not be planned. I do not believe that we should be prepared to consider the prospect of sub-postmasters facing bankruptcy as a result of Government decisions. At a time of economic uncertainty, with increasing unemployment and increasing numbers of people needing to access benefits over the next few years, it is extraordinary that the Government would seek to pursue a policy that would actively destroy the livelihoods of at least 3,000 people. Those closures could be far worse for the long-term future of the post office network as a whole, because a chaotic series of closures across the network could leave serious gaps in provision, which would mean post offices would lose critical mass, and that would undermine the Post Office's ability successfully to bid for future contracts, so this could be the first stage in a very dramatic decline in numbers.

Rob Marris: I served on the Work and Pensions Committee in the last Parliament, and six years ago paying benefits by giro was costing the Government 450 million a year. By how much would the Liberal Democrats subsidise the Post Office each year, given that the party leader's position is to cut overall Government spending by 3 per cent.not to increase it, but to cut it?

Jennifer Willott: First, that is not factually accurate, and secondly, I shall return to that point later.
	On average, POCA payments bring in about 10 per cent. of the net income of sub-postmasters.

Rob Marris: Will the hon. Lady give way on that?

Jennifer Willott: No, I will not give way any more at present. However, POCA is worth significantly more than that in some deprived urban areas. On average, POCA payments bring in about 400 a month, which is 12 per cent. of net pay. That contrasts sharply with the proportion of income post offices receive from bill paymentonly 5 per cent.and from banking transactions, which is currently 1 per cent. It is therefore clear that removing POCA would leave a huge gap in the budgets of sub-postmasters.
	This is not just about the income from the transactions themselves, because POCA brings people into the post office, and at that point they also spend money on other goods and services there. Each of the 3.8 million POCA customers pays on average seven visits per month to the post office, and in each visit they spend on average 6 on the retail side. Therefore, the loss of business that would follow from the removal of POCA could lose the Post Office much of its annual 2 billion retail income.

Tim Farron: My hon. Friend may be aware that in my constituency many of the more popular Lake district towns has a post office. One of them, which I will not name for commercial reasons, has 8,000 people going through it every year because of POCA. Its postmaster reckons he will lose 7,000 of those customers every year, and that could lead to the closure of one of the most popular post offices in the Lake district. Will not losing POCA simply lead to otherwise viable post offices closing down?

Jennifer Willott: My hon. Friend is right, and that shows how worrying this situation is.

Albert Owen: The hon. Lady mentioned other transactions. Does she agree that extra business can be generated by local authorities encouraging council tax payers to pay their bills in a local post office, and is she aware that in my constituency, where the Liberal Democrats are part of the council coalition, it is the policy of that council to discourage people from doing so and to encourage them to pay by direct debit because it is easier and more convenient? Is that not an example of the Liberal Democrats saying one thing when in opposition and another when they get into government?

Jennifer Willott: I find it ironic that the hon. Gentleman is criticising a policy that his own Government pursue. It is, indeed, the case that we should encourage local authorities to support the residents in their local areas to access post offices, and that they should broaden the range of services that are available.

Richard Younger-Ross: The hon. Member for Ynys Mn (Albert Owen) talks about people saying one thing and doing another, but Members should remember that a year ago Ministers said from the Dispatch Box that there would be no more closures. There could, however, be another 3,000 closures, so how hollow are those words Ministers uttered from that Dispatch Box, and how can we trust anything they say today?

Jennifer Willott: If some of the estimates of the number of post offices that could close as a result of POCA being taken away prove to be true, that could be devastating to the post office network, so the Post Office is in a very worrying situation. It is also clear, however, that, as has been made clear from some of this evening's interventions, Labour party Members are fighting among themselves.

Jim Devine: Will the hon. Lady give way?

Jennifer Willott: Not at present. Card accounts are the responsibility of the Department for Work and Pensions, whereas post offices are the responsibility of the Department for Business, Enterprise and Regulatory Reform. This POCA episode has been a prime example of how far from the ideal of joined-up government we sometimes stray. DBERR is committed to forcing the Post Office to make a profit, but how can that be possible without the footfall that POCA brings?

Jim Devine: Will the hon. Lady give way?

Jennifer Willott: Not now. However, the DWP wants to save money, moving all benefit recipients into basic bank accounts no matter what the consequences. It has shown that it will use any means necessary to ensure that vulnerable people are left with the impression that after 2010 they will have no option other than a bank account. My concern is that the DWP is not considering how best to service the needs of its customers. It has to decide whether benefits should be administered in a way that helps the vulnerable customers it is supposed to be supporting or just administered in the easiest way possible for the DWP.
	The loss of POCA could have a huge impact on some of the most vulnerable in society. More than a third of all pension credit payments and more than one in four income support payments are paid into POCAs. In total, 23 per cent. of all benefit claims are paid through POCA.
	Although the pain will be felt across the whole of the UK, several Members have already highlighted the fact that rural areas will be particularly badly hit. Although 60 per cent. of rural areas have a post office, fewer than 4 per cent. have banks, so this will clearly have a disproportionate effect on those areas. In many villages, the post office is crucial to the survival of other businesses in the village. Pensioners and benefit recipients collect their cash in the post office and spend it in both the post office and other village shops.

Mark Williams: Will my hon. Friend give way?

Jennifer Willott: Not for the moment. If such people have to travel for miles into a nearby town to access their cash, they are more likely to spend their cash in that town rather than supporting businesses in the area where they live, so this could have much wider implications.

Paddy Tipping: The hon. Lady is rightly making a strong case for a planned and sustainable post office network, but will she tell us this: does she oppose all post office closures? If she does, what resources will she make available to sustain the post office network into the future?

Jennifer Willott: The issue we are discussing today is how the Post Office can make itself viable, and one of the main issues is the fact that the Government are removing provision and services from the Post Office. If POCA remains, it will enable more money to pass through the Post Office without the need for extra subsidy.

Jim Devine: I am grateful to the hon. Lady for giving way; she is being very generous with her time. She is making an excellent speech, but she is not dealing with the motion, which clearly states that it wants to
	encourage Ministers in the Department for Work and Pensions to consider the impact on communities across the country if the Post Office card account is not renewed; and encourages all Government departments to make their services available through post offices in order to ensure that they have a viable future.
	Is the hon. Lady in favour of ignoring the tendering process: yes or no?

Jennifer Willott: I have made the position clear and addressed all the issues that the hon. Gentleman has just raised. I have talked about the provision of services through the Post Office and about the impact on customersa point to which I shall return.

Alan Reid: Will my hon. Friend give way?

Jennifer Willott: I am not going to give way immediately.
	A further issue concerns those who cannot open bank accounts and involves another group of people we should be considering today. Basic bank accounts do not make any money for banks, and it is becoming increasingly difficult for some peoplethose with poor credit histories, large debts, previous debt problems or no address, and people with certain mental health problemsto open one. In the current climate, banks do not want to take on additional risk, and the number of people in that group is actually increasing. Therefore, when the Government moved giros to direct payment and made people open basic bank accounts or Post Office card accounts, 40 per cent. of the people converting opened the lattera figure far higher than expected. They could have chosen to open a bank account, but they did not want to or were not able to.

Henry Bellingham: The hon. Lady is explaining the case very clearly. Does she agree that at a time of banking crisis, when many of our constituents are very wary of trusting banks, the one thing that they can trust is the Post Office card account and National Savings? Surely it is perverse that the one very safe area is now under threat.

Jennifer Willott: The hon. Gentleman is absolutely correct, and the issue of trust is an important one. There are lots of reasons why people would choose to have a Post Office card account rather than a bank account, and one is that the post office is often an important community resource. It is a source of advice and information and a place where people meet and socialise, particularly in rural areas. Sub-postmasters play a very important role in many communities. They usually know their customers and they are trusted, as the hon. Gentleman said. I recently spoke to a pensioner in my constituency who relies completely on the postmaster in the post office where she collects her pension. She cannot remember her PIN. He knows it, and he tells her what it is every weekit is the only way that she can access her pension. Clearly, that gives rise to security issues, but it shows just how much postmasters are trusted by members of the community.

Oliver Letwin: I very much agree with what the hon. Lady has been saying. Does she agree with me that the problem really is that the Government have prevented themselves from taking account in the tender process of any of the long list of things that she is rightly adducing as reasons for keeping this account with the Post Office?

Jennifer Willott: The terms of the tender is an important issue and I will deal with it later. The right hon. Gentleman is right to raise those concerns.

Katy Clark: Will the hon. Lady give way?

Jennifer Willott: I am not going to give way any more at the moment, because I need to make progress. A number of Members want to speak tonight.
	The physical accessibility of post offices is another reason why people choose to go to a post office, rather than a bank. Even after the latest round of closures, the Post Office, uniquely, has branches in most rural and in most urban areas, so it has a much wider spread than most other providers. Those using the Post Office card account as their main source of cash are particularly likely to have mobility or health problems and no access to a car, and they are more likely to rely on public transport. It is particularly difficult for that group of people to access a bank or another outlet, particularly in rural areas, where usually there are no banks or ATMs. Help the Aged has produced research highlighting particular concerns among those in this position. They are worried that if they have to travel a long way by public transport to get hold of their money, they will have to take out larger amounts each time they travel, which will lead to security concerns while they bring the money back home on public transport. They are also concerned about having more cash at home.
	Access is a question not just of distance but of access to the outlet itself. Most post offices have been physically adapted to allow disabled access. For people in the customer group we are talking about todayit includes incapacity benefit, disability living allowance and pension credit claimantsthe compliance of such properties with the Disability Discrimination Act 1995 is absolutely essential so that they can access their money. The Post Office has taken this issue seriously, but what guarantees do we have that any new outlets that people are forced to use would do the same? Have the Government done a DDA impact assessment on the closing of the Post Office card account and taking it away from post offices? Have they looked at people's access to outlets and within outlets? If, as the rumours suggest, PayPoint takes over, what consideration has been given to the accessibility of PayPoint outlets? What control would the Government have over that, given that PayPoint operates on a franchise basis? How much control would the Government have, in order to ensure that people could access their money in disability-friendly properties?
	Several Members have this evening mentioned that the Government's indecision has already proved extremely damaging to the Post Office, but the decision to give the card account replacement contract to a different operator could be deadly. The Post Office is working toward an unsubsidised post office network by 2016, but that relies on people going through their branches and using banking and benefit services, and on the Post Office card account as a transition. If the Government continue on the destructive path that they are pursuing, the Post Office will not have enough time to recover from the damage caused by the withdrawal of Government business from the Post Office over the past five years and to rebuild itself. We have the perfect opportunity to use an existing network of well-trained, well-informed, trusted staff who are in offices in almost every corner of the country to deliver meaningful improvements in terms of financial inclusion. Post offices actually want and need the custom of the people the banks are turning down, so we should be building on that, rather than destroying it.
	The Post Office needs the replacement card account contract as a bridge to enable it to move to a financially viable position. In countries such as Italy and Ireland, there are examples of successful and thriving post office networks that operate as a postbank. There is no reason why we cannot have a thriving and successful post office network in the UK, but by pulling the rug out from underneath the Post Office's feet at this point, the Government are almost guaranteeing that there will be no future for it.

Daniel Kawczynski: I am very grateful to the hon. Lady for giving way, and she is making a very good case. I was hoping that she would spend a little more time talking about the impact on rural areas. If this card account is not secured, post offices in rural areas and in villages such as Minsterly, in my constituency, will definitely close and the impact on rural communities will be far worse than on urban ones.

Jennifer Willott: The hon. Gentleman is absolutely correct and I hope that I have already made that point, but I am sure that there will be opportunities for others to raise it in this debate.

Katy Clark: The hon. Lady is making a very strong case about how deadly it would be for the Post Office if it lost the card account. Does she therefore agree that there were overriding public policy reasons why the European competition regulations should have been set aside on this occasion, and the tendering process should not have proceeded?

Jennifer Willott: The tendering process certainly gives rise to issues that I want to raise myself, and the hon. Lady makes an interesting point. So far as I can see, the tendering process is probably one of the least open such processes that we have had. I, among others, have been trying to get hold of the terms of the tender. I recently asked for a copy of the documentation setting out the criteria used for the basis of making a decision on the contract to be placed in the Library. The Minister replied as follows:
	The tender process for the contract for the Post Office card account successor is still under way and a decision on the outcome is yet to be made.[ Official Report, 3 November 2008; Vol. 482, c. 9W.]
	That may well be truealthough some people believe that the decision has been made already. However, true or not, it does not answer my question. I asked for the documentation to be placed in the Library. All Members are aware that the decision is being looked at, but the documentation could still be made public. The Government's evasiveness on this point raises questions about the criteria that they have laid out in the contract tender, such as how much emphasis they placed on the need for geographical spread, which links to the issue of rural communities.

Alan Reid: My hon. Friend is right to talk about geographic spread. She mentioned earlier that PayPoint is one of the bidders. The island of Colonsay has a post office, and if people put the postcode into the PayPoint website, they are told that the nearest outlet is at Bowmore, on the island of Islay, which is 22 miles away. Rural areas will be badly hit; however, islands that have post offices but no banks or PayPoint outlets will be much harder hit if the Government do not take into account the fact that, for all these small islands, they must keep the account with the Post Office.

Jennifer Willott: My hon. Friend gives another example of why we need to ensure that we know what the terms of the tender agreement are. The evasiveness that the Government are displaying in this regard is also increasing concern and suspicion among the Post Office's customers and sub-postmasters, who are fearful of the future.
	A number of questions have been asked about the legality of providing continuing state aid if the Post Office is not delivering social benefits. The processing of social benefits is one of the criteria on which applications for state aid approval are measured. If POCA 2 is delivered by somebody other than the Post Office, will the Government's 150 million a year social network payment become illegal? If so, it would be even more devastating for the Post Office across the UK.
	The Government have said one thing about the Post Office and the POCA replacement, but their actions contradict it. While DBERR says that it is trying to reorganise the network so that it is financially viable, the DWP is doing all it can to undermine a valuable piece of business that the Post Office has. The Government need to start being joined up and to stop undermining themselves. I suggest that POCA should stay in the Post Office, that the Government should make wider services available through Post Office branches and that they should put an end to the uncertainty as soon as possible to stop the rot and ensure that post offices have a viable future.

James Purnell: I beg to move, To leave out from House to the end of the Question, and to add instead thereof:
	notes the importance of the services offered by the Post Office to local communities; further notes that the Government has worked with the Post Office to make available services such as its own banking and financial services and access to high street banks' basic accounts; further notes that the Post Office is now the largest provider of foreign exchange in the UK and amongst the largest suppliers of travel insurance, car insurance and telephone services; further notes the potential for future ID management business for the Post Office for passports, driving licences and ID cards; welcomes the commitment of the Government to provide 1.7 billion of support up to 2011 to maintain a national post office network and access to Post Office products, in contrast to no subsidy before 1997; further notes the importance of the Post Office card account in helping people to access basic banking services; welcomes the decision to offer this type of product beyond 2010; further notes that this product is currently out to tender; and believes that people should be aware of the Post Office card account product alongside other methods of payment..
	The whole House knows how much a Liberal Democrat MP loves a Focus leaflet, and we have a great testament to that here this evening. I was worried at one stage that the hon. Member for Cardiff, Central (Jenny Willott) was never going to finish her speech, because she was being intervened on by so many of her colleaguesit was extraordinary. I have heard of people being mauled by a dead sheep; I was worried that she was about to be mauled by her own very supportive sheep halfway through that contribution.
	We heard the typical response from the Lib Dems: the prewriting of that Focus leaflet, but with no proposals. We heard nothing on whether they thought that there should have been a tender, on whether they would subsidise it more or on what they thought about whether the Post Office and its future should be guaranteed, and how that should be done. In terms of policy enlightenment, we learnt very little.

Several hon. Members: rose

James Purnell: If I may first set out my case, I shall then give way.
	Let me start by making one central point clear: nobody in this House believes that the Post Office should be run on a purely commercial basis. If we believed that it should be, the network would consist of 4,000 post offices, rather than at least 12,000, even after the current closure programme, as has been mentioned. That figure is higher than the total of all the high street banks put together. We do not believe in a purely commercial network, because the Post Office is not a purely commercial service; it reaches parts of our community that others do not, it is used and understood by people in ways that others are not, and most of all it is a cornerstone of our local communities. George Thomson, the general secretary of the National Federation of SubPostmasters has said that for many of the elderly and disadvantaged people in our society
	the visit to the Post Office is...the highlight of their week, as they interact with the Subpostmaster, his staff and other customers.

Peter Luff: rose

James Purnell: I can see the hon. Gentleman, who chairs the Select Committee on Business and Enterprise, twitching to intervene on me.

Peter Luff: The Secretary of State has puzzled me. I am happy to stand corrected on this, but my understanding is that, historically, the post office network has run on a commercial basis and that the aspiration of its current management is that it should once again do so. An interim period has to be got through, but the noble aspiration is for post offices to stand on their own two feet, and I heartily support it.

James Purnell: I said on a purely commercial basis. Indeed, under the hon. Gentleman's Government there was no subsidy for the Post Office, whereas our Government have spent 2 billion, and we are planning to spend a further 1.7 billion between now and 2011. There is a significant difference between the way in which we have supported the Post Office and the way in which his Government did.

Lindsay Hoyle: Will my right hon. Friend look again at the situation that we have got ourselves into? People who are using the Post Office card account were told that it would finish in 2010, but they were not told that there would be a POCA 2. Will he put right that wrong and ensure that not only will customers be told that POCA is being replaced, but that we will encourage people to use POCA, rather than give the discouragement that we have seen previously?

James Purnell: I am happy to give my hon. Friend that assurance. Indeed, the hon. Member for Mid-Worcestershire (Peter Luff) wrote to me recently complaining about the POCA not being featured in our cheque conversion literature, and I am glad to tell him that we have now addressed that and that we have a new leaflet. The leaflet does exactly what my hon. Friend requests, stating that
	you might want to consider opening an account.
	It also states:
	The Post Office card account is also an option for those who want a very basic banking product.
	It makes clear in a list of accounts that that is one of the things that will be included. I am also happy to say to my hon. Friend that we will review our marketing of the POCA to ensure that exactly what he set out is achieved. We have not written to people asking them for their bank account details if they have a POCA; there has been a process in respect of cheques, but I shall return to that later.

Lindsay Hoyle: I welcome that reply, but to back it up, will the Secretary of State look at what services can be brought into post offices for their longer-term viability and sustainability? Will he also look to set up a taskforce to ensure that we can find new services, beyond POCA 2, to ensure that the Post Office remains in its entirety and to secure its long-term viability?

James Purnell: Yes, I am happy to make that commitment to my hon. Friend; the process that he describes would be a helpful one. We cannot guarantee that any particular service will go to the Post Office if it required procurement, but we can say that identity cards and identity services could be a good business opportunity for the Post Office. By contrast, we know that under both the Conservatives and the Liberal Democrats the Post Office would have no ability to secure such services.

Susan Kramer: Do I correctly understand what the Secretary of State just said as a Government commitment to make up in subsidy any business loss that would come from shifting POCA to another provider? If not, the comments that he is making are simply empty, because they merely presage other post office closures.

James Purnell: I have no idea to which of my remarks the hon. Lady is referring. I am happy to be intervened on again, but I said nothing to imply what she describes. Indeed, I make it very clear that it would not be appropriate for me to make any comment on the procurement process and where it has reached.
	As much as the Opposition would like to pretend that we can ignore the way in which the world is changing, we cannot do so. The way in which the Post Office operates and the market in which it does so are different from what happened 10 or 15 years ago; they are even different from the situation two years ago. Some 4 million fewer visits a week are made to a post office and 1 million car tax disc renewals are done online each month.  [Interruption.] The Opposition can protest if they want, but these changes are happening in our society. People want to renew their tax disc outside working hours and to do so online. Are the Opposition seriously saying that we should refuse to offer online services? If that is their position, they are even more antediluvian than the hon. Member for Castle Point (Bob Spink).

Bob Spink: I am so surprised that the Secretary of State does not appear to be listening to the noises coming from his own Back Benches on this important subject. Does he not realise that there are fewer footfalls in post offices because the Government have been removing public business from the Post Office for many years? When will he adopt a policy to return public business to the post offices?

James Purnell: I do not know whether the hon. Gentleman has heard of the internet, but it is having quite a big impact on retail outlets. For example, he might be aware that Tesco sells some of its products over the internet these days. The Post Office cannot be immune to these services. The question is: how do we maintain the fundamental objectives that we have for this important service, while realising that the world in which post offices operate is changing? How can we help them to modernise, as opposed to putting our head in the sand and pretending that those changes are not happening?

Steve Webb: rose

James Purnell: I need to make some progress, because many hon. Members wish to speak. The hon. Gentleman can intervene on me later.
	We need to recognise that we are operating in a world where people are getting services online and in other ways, but it is also important that we do not forget that that does not apply to everyone; a large minorityone in three peoplestill do not have online services at home and 2 million people do not have bank accounts. As the hon. Member for Cardiff, Central said accurately, they are often the most disadvantaged and vulnerable in our society. That is exactly why we have decided to renew the Post Office card accountalthough at one stage she implied that we were not doing that.

Steve Webb: The Secretary of State repeats the tired old excuse that society is changing because of the internet and all that, and so such things were happening anyway. However, they were happening slowly. The Government have hastened the process and given the post offices less time to adjust to the new world that we accept we are moving into. Why have the Government made it more difficult for the post office by speeding up the process of change and pressing people to move over to banking instead?

James Purnell: We are actually doing exactly the opposite. We have put in place access criteria to preserve that spread. The Committee chaired by the hon. Member for Mid-Worcestershire recommended that change. It said that the access criteria
	were a welcome step in safeguarding access to services for groups across the United Kingdom.

Peter Luff: If the criteria are so goodI believe that they probably arewhy were they not part of the bid for this contract?

James Purnell: They are reflected in the minimum criteria in the contract. The exact tender document is commercial in confidence, but we have made available the  Official Journal of the European Union advert and it has been put in the Library.
	I know that Liberal Democrats find this hard to understand, but we have to modernise the service and get more services into the Post Office. We have invested in IT, for example, which has allowed the Post Office to have a very successful IT project, as my right hon. Friend the Member for Birkenhead (Mr. Field) said. We put 500 million into that project precisely so that the Post Office could deliver bank accounts, offer foreign currency services, expand the service that it provides and increase footfall. That strategy has had a significant effect

Steve Webb: Yes, it has.

James Purnell: The hon. Gentleman might be interested in the facts. The Post Office is now the fifth largest fixed line telephone service provider in the UK. It sells one in 50 of all car insurance policies and insures one in every 200 homes. It is the largest provider of foreign currency in the country. That is all because of the investment that we have put into the Post Office. As a result of those changes, 60 per cent. of bank accounts can be accessed in post offices, including those in both the Scottish banks mentioned by the right hon. Member for Gordon (Malcolm Bruce), who has now left his seat.

Elfyn Llwyd: May I ask the Secretary of State a specific question about the bidding process? If PayPointa private companywas successful, it would not be covered by the provisions of the Welsh Language Act 1993, so would there be no Welsh language provision for those who require it?

James Purnell: The hon. Gentleman can ask, but I shall frustrate him and the House, because there is nothing I can properly say about the tender process. It is important that we take that decision with due process and we will make our announcement in due course.

Kate Hoey: My right hon. Friend talks about the tendering process. Will he tell the House clearly why we had to put this account out to competitive tender? Does he not accept that there are other countries in the European Union where that has not happened? Those examples might not be direct comparisons to do with the same type of contract, but they have occurred in other areas to do with public service where there is a social motive. Why do we always have to obey every little dot of the European Union and European Community competitive actions when other countries get away with it? We are left with a situation in which the Post Office might end up without the Post Office card account.

James Purnell: I know that my hon. Friend shares with the Opposition a lack of keenness to obey the European Union. There is a tradition of not commenting on legal advice given to the Government, and it is important that we maintain that. The Republic of Ireland is an example of a country that did not go out to tender and was taken to court by the European Commission. The case was not proven in the end, but it is not true that that example was not affected by European regulation. The important point is that we have to complete the process and to do so in good order.

Paddy Tipping: My right hon. Friend has used the phrase due process on a number of occasions. Will he take it from me, from those of us on the Government Benches, from the Post Office and from its customers that the sooner he comes to a decision and announces it, the more it will be in his interest and that of everyone else?

James Purnell: I know that this is a difficult thing to say, but due process is important. It is important that we take decisions legally, and I am sure that everyone in the House would agree with that. On the subject of the timing, I can reassure Members that we will take the decision very soon [ Interruption. ] The House will find out exactly when that is when we make the decision.

Robert Smith: It is not so much that the House needs to find out. All the sub-postmasters and sub-postmistresses who have had the restructuring of their businesses taken on by the Government and who have faced the closure programme now need to know what to do with their businesses. The businesses are being closed as people have to retire. How does the new investor know what kind of business they are taking on if the Government will not make up their mind? It is an issue not just for the House, but for all those hard-pressed sub-postmistresses and sub-postmasters out in the country who want to know how to run their businesses. They need to know how soon the decision will be made. Will they have a decision before Christmas?

James Purnell: They will definitely have a decision way before that. The hon. Gentleman has to bear with me as the decision must be taken in due order. I cannot take a decision before all the necessary options have been completed. Indeed, the worst possible thing would be to take a decision that was then unwound. I do not want to try the patience of the House by using up the time

Nigel Waterson: You already have.

James Purnell: The hon. Gentleman, in his normal courteous way, says that I already have, so I shall take that as a further injunction to complete my remarks and will make some progress, if he will allow me.
	We renewed the Post Office card account because it provides an important service for our customers and is an important way of helping people who would otherwise be financially excluded. Many people in many communities value it. I want to make it clear that I completely understand the strength of feeling that has been expressed in the House and by the thousands of people who have written to all Members to explain how strongly they feel. I feel that I have already made it clearat boring lengththat I cannot say anything further on that point.

Several hon. Members: rose

James Purnell: No, I have given way enough.
	Let me pick up on the points about cheque conversion. There is a difference between cheques and POCA. As far as POCA is concerned, we have not been writing to our customers instructing them to open bank accounts. There was one mistaken letter, for which we have apologised, and the hon. Member for Mid-Worcestershire has brought another two incidents to my attention; we have corrected the problem and will be providing further training. I can reassure him that that is not the official policy of the Department; we have not written to people to ask them to transfer their POCA accounts to bank accounts. We have with cheques and we have been doing that since 2005. There is nothing new about that at all. Indeed, I have amended the leaflet in the light of the hon. Gentleman's letter to me.
	It would not be true to say that we are not opening new POCAs. We are opening 12,500 POCAs every month, precisely because we inform people about the availability of that service.

Rob Marris: Does my right hon. Friend understand from the debate what the Liberal Democrat policy is? I intervened on the hon. Member for Cardiff, Central (Jenny Willott) and gave two figures. The first was the 450 million annual cost of sending out giros, and she said that that was wrong. She then said that it was not her party's policy to cut Government spending by 3 per cent. The adjective she used was inaccurate, but the reference to 3 per cent. is a quote from the leader of her party in a speech made in the City of London on 12 May 2008. Does the Secretary of State understand the Liberal Democrats' policy or is he as confused as I amperhaps because they are confused?

James Purnell: My hon. Friend makes an excellent point. The answer will be familiar to my hon. Friends: it is the magical Liberal Democrat money tree, which produces both cuts and increases in public spending without their ever having to be squared in any way at all. He is right to say that the Liberal Democrats want to make cuts of 20 billion. If I were running a post office I would be more worried about their being in power, because they will need to find those cuts. That stands in clear contrast to our policy of increasing spending on the Post Office.

Russell Brown: My right hon. Friend said that about 12,000 new customers every month were entering the Post Office card account system, but I am sure that he will also be aware that about 22,000 leave the system every month. Although we all want the Post Office card account contract to be awarded once again to the Post Office, he will recogniseas I hope the rest of the House doesthat it is not the complete answer and that it cannot continue ad infinitum.

James Purnell: My hon. Friend is absolutely right. The other services that I mentioned are part of the answer; ID services could be part of the answer, as could other services that the Post Office is developing.

Richard Younger-Ross: Will the Secretary of State give way?

James Purnell: No, I am bringing my remarks to a close.
	My hon. Friend the Member for Dumfries and Galloway (Mr. Brown) is right, too, to say that other types of financial service are part of the answer. Sixty per cent. of bank accounts are available from post offices, which in itself increases footfall, as well as increasing people's ability to find a job because their salary can be paid into a bank account. It increases their ability to make reductions in their energy costs through the use of direct debits. As he says, there is no single solution.
	The solution lies in modernising the Post Office, investing in it and having access criteria that preserve the level of service that people expect. That is exactly what Government policy is doing and I commend the amendment to the House.

Chris Grayling: I listened carefully to the Secretary of State, but my clear view is that the Government should be ashamed of their handling of local post offices. Over the past few years, I have heard time and again how little Ministers have done to find a new role for post offices at a time of change. The big fear today is that Ministers' lack of judgment on the future of the Post Office card account will ring the death knell for yet another large swathe of the post office network.
	No one on either side of the House has ever argued that the post office network should go through no change at all. It has changed under Governments of all persuasions, but for years it has felt as though Ministers have no interest in finding ways of ensuring that the local post office has a future role. The Secretary of State says, Trust us and what we are doing, but we have only to remember how the Government and their Ministers handled the launch of the Post Office card account in the first place. They published booklet after booklet. There may have been corrections in oneas we heard todaybut over the years booklet after booklet has explained to people how payments can be made directly into their bank account, and has set out other new ways of dealing with the Department for Work and Pensions and its agencies. However, to the fury of local postmasters and postmistresses in my constituency and around the country, the Post Office card account was mentioned only as an afterthought, buried in the small print in leaflets that most reasonable people judged as completely biased against it.
	There was real frustration in post offices that customers had to turn page after page to find out whether the card account was even an alternative. At the time, I read the leaflets and promotional material and it certainly looked as though the Government hoped that the Post Office card account would not take off.
	The product had an unhappy childhood, but despite all the Government's efforts large numbers of pensioners now depend on itfar more than expected. More than 4 million people use the accounts, half of them pensioners. Much more could be done with the card accounts to make them of even greater benefit to those who use them.

Daniel Kawczynski: The Secretary of State said that a decision would be made before Christmas. Will my hon. Friend lobby the Secretary of State to ensure that the decision is not announced on the last sitting day, just before we go off on our long recess, and that it is made way before then so that we can debate it in the House?

Chris Grayling: My hon. Friend makes an extremely good point. Given the Secretary of State's undertaking, I invite him to intervene with a commitment that he will not only announce the decision before Christmas but will make time in the House for a debate on the outcome.

James Purnell: It is not up to me to decide whether there should be a debate, as the hon. Gentleman knows, but I can absolutely give him the commitment that it will not be on the last day of the sitting before Christmas.

Chris Grayling: None the less, I trust that the right hon. Gentleman will use his good offices and his influence to ensure that the House has time to debate the decision.
	Frankly, there should be no need for a debate on the decision. The Secretary of State has heard the views of Members on both sides of the House. We think the product is vital, and the fact that we are debating even the possibility of the Post Office losing it is a huge failing on the part of the Government, and represents a huge problem and a huge challenge for our post office network.
	I am glad to hear the Secretary of State's assurances that he is trying to do his best with marketing, but only today I received a letter from a postmaster in Liverpool who asks why the Government are still making things difficult for people who want to take out a Post Office card account. He said,
	listen to the conversation with the DWP as they try to obtain a POCA account and you will witness what I have witnessed, that the choice is simply not offered, in fact it is positively discouraged to the point of coercion.
	That was said not by a politician, but by someone who is dealing with customers in the front line right now. I applaud the Secretary of State for rewriting the brochures, but he has a much bigger problem to address.

Lindsay Hoyle: I am rather shocked. Yes, the Government have not been enthusiastic about getting people to use POCA, but if a sub-postmaster is worth their salt, especially in my areaI cannot understand why this is not reflected in other areasthey encourage people to sign up to POCA. POCA has been successful because of sub-postmasters. I am a little shocked that that sub-postmaster does not understand the rules that they are using.

Chris Grayling: It is an issue not of sub-postmasters not understanding the rules, but of the people with whom would-be customers are dealing still not supporting the Post Office card account. That remains a major problem today.

Peter Luff: The Secretary of State indicated that these are all isolated occurrences. There have been far too many isolated occurrences, one of which occurred in my constituency last week, when the wife of a sub-postmaster was told on the phone by the Pension Service that POCA would not be renewed after 2010. When she challenged him, because she knew exactly what the situation was, the chap said, I wish our bosses would tell us to say that, but they don't.

Chris Grayling: My hon. Friend makes an important point. I have no doubt that we will hear from him later if he manages to catch the Deputy Speaker's eye. He and his Committee have been doing important work in this area.
	The long delay in the announcement of the contract makes it look pretty clearthis is one of the things that is unsettling the post office networkthat Ministers have decided to move the account elsewhere but have realised that the political consequences of doing so will not be pretty, so the impression left is one of Ministers struggling behind the scenes to soften the blow.

David Taylor: Does the hon. Gentleman agree that we would have the worst of both worlds if the decision allowed the Post Office to run the card account in rural areas but split it with PayPoint in suburban and urban areas?

Chris Grayling: I absolutely agree. This is a Post Office card accountthe Secretary of State continues to use that titleand that, to my mind, means that it should be handled in a post office. It would be a tragedy and a travesty for our post office network if that did not apply in future. It would be a huge blow if it were a hybrid or a total loss. I am certain that thousands more post offices would disappear. Even with the kind of hybrid that has been mentioned, the National Federation of SubPostmasters estimates that some 3,000 post offices will disappear if the decision goes the wrong way.

Jo Swinson: Does the hon. Gentleman agree that the Government have failed to grasp the depth of anger felt by the public and sub-postmasters about the fact that, after years of post office closures under the urban reinvention and network change proposals, it looks as though there could be a wave of new closures because of the Post Office card account? People are asking, Where will it all end? What will be left of our post office network?

Chris Grayling: The hon. Lady makes an important point, and I hope that Ministers will listen to the comments coming from both sides of the House. The issue does not divide on party political lines; concerns are shared across the House, and most Members do not want change. I hope that that message has reached Ministers loud and clear in the decision that they are taking. They have taken so long to take the decision. If people say that they will take a decision and then delay it month after month, it not only creates a sense of real insecurity and uncertainty in the post office network, but sends a message of a lack of commitment to the product.

Albert Owen: Both the hon. Gentleman and I want the Post Office to deliver the card account, and does he agree that there have been some successes? I think that he said in his opening remarks that things have gone downhill. For instance, the foreign currency exchange is good for the Post Office, because it can compete on a level playing field. Does he not also agree that, to sustain the network for the future, it needs a substantial subsidy of some 1.7 billion to 2011? Will the Conservative party match that policy?

Chris Grayling: If the hon. Gentleman had been listening to my hon. Friend the Member for Mid-Worcestershire (Peter Luff), the Chairman of the Business and Enterprise Committee, he would know that the Post Office's objective is to return itself to where it was 10 years ago, which is being commercially viable. The tragedy of the way in which the Post Office card account has been handled is that the Government have actively sought to discourage people from signing up. At no point has any hon. Member on either side of the House called for a cut in the support to the Post Office, but we all want the Post Office to be in a position to restore itself to balance. That would give it longer-term security and, frankly, free it from the vagaries of decisions taken by Ministers.

Roger Gale: The  Hansard record of the debate will show that the Secretary of State saidI quote himthat far too many people still do not have a bank account. Is not the reality that the Government are trying to drive people towards the banks? Is it not the fact that the Government do not care about the Post Office card accountthe only successful piece of information technology that they have managed to introduce?

Chris Grayling: My hon. Friend makes an extremely important point.

James Purnell: For the record, I hope that the hon. Gentleman will allow me to make a correction; I did not say what the hon. Member for North Thanet (Mr. Gale) said I did. I said that 2 million people do not have bank accounts, which is why POCA is so important. That is the opposite of what he quoted me as saying.

Chris Grayling: The Secretary of State is absolutely right that the issue that we are debating today is not simply access to the Post Office card account to enable pensioners to get pension payments. The issue is also about social deprivation and the challenges that exist in many of our communities. It is a crucial issue for families in the battle against poverty. It is all very well for us; we have easy access to financial services, banking, credit, cash to pay our bills, and funding for major purchases such as a car to get to work. However, the truth is that one in 25 families still has no bank account of any kind, and 800,000 children are being brought up in households with no bank account. Some 7.8 million people in the UK are unable to access mainstream credit. That puts huge extra financial pressure on families. That is why the debate has deeper significance; it is not simply about the future of the post office network, however important that is. We are dealing with a vehicle that can address some of the biggest social issues in our society.

Roger Williams: Some of my most vulnerable constituents have been told that they will no longer be able to receive their giros. They are unable, even with the help of their local postmaster, to access POCA. That leaves those very vulnerable people in an even more difficult position.

Chris Grayling: It is enormously disturbing that people are finding it difficult to sign up to POCA. It should be as easy as anything to sign up for it. If it is difficult to do so, it is a sign that the system is still not working.

David Drew: I am in a unique situation; I went to a post office reopening today in my constituency, but we are like that in Stroud. Does the hon. Gentleman agree that one of the sad things about all that has happened to the Post Office is that it is not just central Government who have withdrawn their services from it; local government started the process. Members from across the political parties could encourage local authorities to look again at the services that they could still provide through the Post Office. Is that something that the Conservative party would like to do alongside the Labour party?

Chris Grayling: I would like Departments and local authorities to look at ways of strengthening our post office network, yes, but the significance of the debate is that it shows that there is no other step in the pipeline that would lead to such an extensive further closure programme in our post office network. That is why the debate is so important.

Justine Greening: My hon. Friend has not yet mentioned small businesses, but those in my constituency absolutely rely on local post offices. We have lost more than half our network in the past five years. Does he agree that this is the last time at which we should want to reduce small businesses' access to post offices?

Chris Grayling: My hon. Friend makes an important point. We know that small businesses use post offices vastly disproportionately more than any other similar services available to them. The disappearance of the local post office can be a real blow to small local businesses, particularly emerging businesses in areas of society that face significant challenges.
	Of course, there is another dimension to the financial pressure on families, apart from the lack of access to banking services. Someone without access to financial services cannot access the cheapest tariffs, because they do not have the basic ability to pay through direct debit. There have been all kinds of estimates of the cost of the poverty premium to people on low incomesthe extra that they pay to access basic financial services and utilities: the figure of 1,000 a year is common. The Financial Services Authority has said that the lack of access to those services pushes family costs up by as much as 700 a yearmoney that could be better used for other things.
	What has the Government's response been? Instead of looking at how we can build up the Post Office, so that it can offer people extra services, the Government are taking steps that risk emasculating the one institution that has national reach, and that could help to bridge the banking gap left behind as the branch networks of the big banks have retreated in the past 10 years. When the Secretary of State talks about renewing the Post Office card account, what is in doubt is whether, in the end, it will be a Post Office card account. If the post office network disappears or goes into another period of great retrenchment, we will condemn entire communities to a life in the financial wilderness, when a degree of planning and thinking could have turnedcould still turnour post office network into a real force for good in many areas, growing, becoming more diverse and offering a route into banking for those who are deprived of it. That is why we have proposed an extension of the functionality of the Post Office card accountinitially to help people to access a better deal on their utility billsand it is why we think that there is enormous potential in expanding the account into other areas.
	The concept of cheaper utility bills is simple. Ministers have talked a lot in the past few weeks about the fact that some of our poorest people cannot access the cheapest tariffs from electricity and gas providers. If people were able to use their Post Office card accounts to make direct debit payments for their utility bills, they would be able to access those much cheaper tariffs. It is a simple idea at a time of high energy bills, and I wish that Ministers would seize on it and turn it into a reality. The Post Office card account and the post office network could do so much more to help breach the barriers to financial services in so many of our deprived communities.
	The Government have, step by step, brought us to what I think Members from all parts believe to be a sorry position. We know the constraints on the Secretary of State, and he cannot tell us exactly what is happening. It has been a theme of the process: we were not allowed to know what was in the tender documents, and we are not allowed to know who is bidding. There is no reason, however, why we cannot know, from a Government who 18 months ago said that they would bring a new sense of openness to governing, at least some basics about what is going on.
	I hope that the Secretary of State will take away a strong message from the House in this debate. Local post offices remain of enormous importance and enormous concern, and the future of the post office network depends significantly on the decisions that he and his colleagues will take in the next few weeks. We have heard from the Secretary of State about all the things that the Government claim to have done for our post office network, but that is not the message that I and others in the House get from people who work in the network. They all say that, step by step, the Government have removed the services that have kept their businesses going, and that, as a result, many post offices have disappeared.
	The future of the Post Office card account will determine the future size of the post office networkwhether or not there is another wave of closures. I do not think that we can afford to see more post offices disappear, so my message to the Secretary of State is that it is time that the Government did what was actually right.

Several hon. Members: rose

Mr. Deputy Speaker: Order. Before I call the next Member to speak, may I say to the House that a 10-minute limit on Back-Bench speeches will apply from now on? A very large number of hon. Members are seeking to catch my eye, and if they take less than their allotted time more of them will be able to speak.

Gerald Kaufman: It is always a great pleasure to follow the hon. Member for Epsom and Ewell (Chris Grayling) in debate. He is always charming, and he is always implausible. He tried to wring Members' hearts by saying how many people would be forced to obtain their benefits through bank accounts if Post Office card accounts failed, which I hope they will not. I should like to remind him that in his own constituency, 89 per cent. of benefit recipients obtain them through bank accounts, and that only 9 per cent. do so through Post Office card accounts, so he is being very altruistic when he calls for the saving of Post Office card accounts.
	Let us be very clear about the issue: Post Office card accounts were created by this Labour Government. The Conservatives and the Liberal Democrats try to portray the accounts as a grand old British tradition, like fox hunting or the Poor Law, but the account was created by the Labour Government in 2003 as the electronic equivalent of the benefits order book, which people used to collect their pensions. The Post Office card account is a hugely valued public service, and it was created by this Labour Government.
	Nationally, 4.5 million people have Post Office card accounts, and in my constituency, 8,110 people collect their benefits through them. The accounts offer a valuable service, and I want them to continue; throughout this controversy, my whole objective has been to persuade whomever is necessary that they should continue. Of course, the account costs money. It is quite expensive compared with other services, but so are other initiatives created by the Labour Government: Jobcentre Plus offices, Sure Start and the new deal are all expensive, but who today would disband any of them on the ground that they cost a lot of money? The answer, I suppose, is the Conservatives and Liberal Democrats, as they opposed their creation in the first place. However, the Labour party believes in creating public services for those who most need them, and the Post Office card account is a public service for those who most need it.
	Hon. Members for rural constituencies often talk about post offices as community centres, and I respect that. I am sure that those hon. Members are right, but their point applies in the inner city as well.

James McGovern: Is my right hon. Friend aware that some rural post offices carry out as few as 14 transactions a week? That means that each transaction is subsidised to the tune of 18.

Gerald Kaufman: I am grateful to my hon. Friend for that information, but nevertheless I respect what is said by hon. Members from both sides with rural constituencies when they point out that rural post offices are community centres. But post offices are also community centres in inner-city areas, such as my constituency of Manchester, Gorton. The Post Office card account keeps small post offices going; it represents 27 billion worth of transactions every year. That is important. The account provides custom for other post office facilities; people go in to collect their benefit and decide to make another transaction. The account also provides custom for local convenience shops. Pensioners and others on benefit in my constituency go to the post office for their benefit and spend some of it in the local shops for their household or personal needs.
	As I have made clear to my right hon. Friend the Secretary of State, my constituents believe that it is essential that the Post Office card account should continue. Of course, we recognise that the Government have to conform to the European Union procurement rules; whatever else the hon. Member for Cardiff, Central (Jenny Willott) said, she, a representative of the Eurofanatic party, did not tell the Government to ignore EU procurement rules. The Government are not a totally free agent, so I understand why my right hon. Friend has not been able to announce a decision. However, the Liberal Democrats did not mention the European Union rules because they are totally opportunistic. They probably did not know that there were Post Office card accounts until the National Federation of SubPostmasters started organising postcards that alerted them to the fact that here was a little opportunistic horse on which they could ride. That is what the Liberal Democrats look for, the whole timeWhat is the opportunity? What is the grievance? Let's get on board. It doesn't matter what we thought before or what we say next time. At the moment, this could be a vote winner.
	No doubt the hon. Member for Manchester, Withington (Mr. Leech) will be circulating Focus leaflets in his part of Manchester, so I am interested that he has not even bothered to turn up for this debate. We shall make that clear in Manchester when crocodile tears are wept about the Post Office card account. The Liberal Democrat MP who got his seat on a bogus scare about the closure of the cancer hospital cannot even be bothered to turn up and speak up for his constituents on the Post Office card accounts, as Ia loyal Labour Back Bencheram doing.  [ Interruption . ] There are all kinds of brands of loyalty. At the end of this debate I will vote with my Government, as I always do, because the last thing in the world that I will ever do is vote with the Liberal Democrats on an opportunistic motion that they do not even believe in themselves.

Robert Flello: I am thoroughly enjoying my right hon. Friend's contribution. I could not agree more that we should not be walking through the Lobby joining opportunistic bandwagon-hoppers like the Liberal Democrats. Does he accept that the Post Office card account is so extremely popular with my constituents, as with his, partly because it is part of the Post Office, not PayPoint or any other organisation?

Gerald Kaufman: I agree with my hon. Friend. Twenty-nine per cent. of my constituents who collect benefits collect them through the Post Office card account. It is a very valuable service for the people who send me to Parliament, and I want it to continue for their sake and for the Post Office's sake.

Iain Duncan Smith: It is unconscionable that the Post Office card account should go from the Post Office; in a sense, it is like a backstop. Does the right hon. Gentleman agree that in many communitiesparticularly, speaking as an urban Member, inner-city communitieswe should think of these post offices as an outreach: a fantastic resource through which we could find many other ways of getting to people in difficulty instead of seeing them, as the Government do, as a problem because there are too many of them?

Gerald Kaufman: I entirely agree with the right hon. Gentleman. What we have is a public resource going right back to Rowland Hill in 1840. These days, there are very few institutions that are greatly respected by ordinary peopleobviously the national health service is one of them, but the Post Office is certainly another. The words Post Office and Royal Mail really mean something to people. That is one of the reasons why it is so essential that it remains a publicly owned service. I hope that the Government will look for other ways of using these centres to provide public services for our constituentsthose of the right hon. Gentleman in the area that he represents and mine in the area that I represent.
	As I say, no force on earth will get me to walk through a Division Lobby with the Liberal Democrats on a motion tabled by those cynical opportunists. However, the fact that I will not vote with them does not mean that I do not expect something from my Government. What I expect from my Government, recognising that they cannot make the announcement this evening and have to abide by the European rules, is a firm decision, as soon as it is possible for them to make it, to continue with the Post Office card account. I have been in correspondence with my right hon. Friend the Secretary of State and with my right hon. Friend the Prime Minister, who sent me an encouraging, but of course not conclusive letter. I say to my right hon. Friend the Secretary of State: come up with what we want, James, and you will be an even bigger hero than you are now.

Peter Luff: I intend to speak primarily as Chairman of the Business and Enterprise Committee, which this morning produced a report on this very subject. We published it because we were so concerned about the extraordinary delay in reaching a decision that was originally trumpeted as coming in early 2008, then hinted at before the summer recess, and now here we are in the middle of November still with no decision. I commend the report to the House. I am grateful to the hon. Member for Chorley (Mr. Hoyle) for waving a copy.
	However, I also want to speak as a constituency Member of Parliament, because it is from our constituents that we understand the importance of this issue. An 84-year-old man from Droitwich rang my office this morning to say how worried he was about the future of the Post Office card account. He explained that he and his elderly friends find it increasingly difficult to sort out their affairs because they can no longer speak to anyone to in order do it. He said that they find all these touch machineshis wordsfor statements of accounts and so on very confusing, and that even parking the car and using ticket machines is worrying. He said how important the post office was to him and his friends because, as the National Federation of SubPostmasters pointed out in its submission, they get advice there on how to do these things. That personal touch is what the card account brings to elderly, disabled, worried, confused or deprived people.
	I shall speak as a Select Committee Chairman, but I want to make one brief partisan comment first. I thought that the Liberal Democrats' motion was extremely good, and I discovered that that was because the hon. Member for Chorley drafted it. They have copied his early-day motion word for word and comma for comma, as he said. That explains the excellence of the drafting, which I commend to the House, and I invite the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) to vote for it in view of its origins, which are honourable indeed.
	I was a little surprised and disappointed by the Government's amendment in two respects. First, touching on an issue we have already debated, it trumpets the fact that there was no subsidy before 1997. A word in the Secretary of State's ear: that is the wrong attack. Royal Mail Group is in trouble because the Conservative Government probably took too much money out of it, denying it the investment it needed, because it was making so much money. It did not need subsidy. I strongly advise the Secretary of State not to repeat the line about no subsidy before 1997. If he wants to attack my party, there is a better way of doing it. Subsidy is not a particularly good thing to trumpet anyhow because the Post Office does not want to be subsidised; it wants to be commercially viable again and it has a plan to work towards that. That is really important.
	On an even more partisan note, I would like to deal with this idea that the card account can be replaced with the
	potential for future ID management business for the Post Office.
	So we replace a much-loved card account used every week by pensioners, through which they receive money, with an ID card that they do not want, which they replace perhaps once every 10 years, and for which they have to pay for the privilege. I find bewildering and surprising the idea that ID management in some sense replaces the Post Office card account. I shall vote with pleasure for the Liberal Democrat motion, knowing its origins, and with pleasure against the Government's amendment because it is so outrageously wrong.
	We are talking a lot about the future of the post office network and the potential for up to 3,000 closures. That potential certainly exists, but this debate is all about the 4 million vulnerable people who choose to use the Post Office card account. As we say in paragraph 12 of our report:
	the POCA caters for precisely the people who do not want to, or cannot, use conventional bank accounts: in the very nature of things, they are disproportionately likely to be poor or elderly.
	They actually want the Post Office card account as a separate pot of money. Some of them have bank accounts, but they want that separate pot, too, because it helps them to manage their affairs. I sometimes think that the Department for Work and Pensions has a slightly patronising attitude of, We know better than you how you should run your financial affairs. Actually, 4 million people still choose to run them this way, in the face of massive incentives not to have a Post Office card account, and those wishes deserve to be respected. As we say in our report:
	Their needs should be paramount
	as the Government reach their decision.
	I would like to highlight the question of state aid, which is a thorny question for the Government. The state aid permission for subsidising the network was given on five specific grounds, and as the hon. Member for Cardiff, Central (Jenny Willott) said, at least two of these depend directly or indirectly on the continuation of the card account:
	the processing of social benefit and tax payments
	and
	universal access to basic cash and banking facilities and Government savings instruments, especially for rural customers and those on social benefits.
	As we say in our report:
	The Government must consider the implication of the state aid decision.
	If the Post Office does not get the card account, the Government could also lose the ability to subsidise it. That will be necessary until the post office network makes money once again, as I believe it can under its new and very good leadership.
	As I said in my intervention on the Secretary of State, the Committee had some reservations about the access criteria, but broadly speaking we endorse them in the current circumstances. What a shame they were not spelt out in the tender documentation in the original advertisement in the  Official Journal  of the European  Union. The journal entry contained an important phrase. It said that the ATMs and personal teller outlets should be located throughout the UK. It is an important phrase that the Secretary of State needs to note carefully. I believe that it gives him the opportunity to make the right decision on the future of the card account.
	There are two criteria that the Government need to bear in mind relating to that remark about the distribution throughout the UK. In paragraph 13 of our report, we say:
	A tender which offered far more teller outlets than the 10,000 specified,
	the advert specified 10,000
	but could do so only in urban or relatively densely populated areas would not, in our view, meet the needs of POCA users.
	It is important to understand that. Paragraph 15 states:
	Moreover, the new service will have to provide  reliable access to cash for those using the card account. No tender should be accepted if it cannot demonstrate that it can meet this need, at the branch most convenient for users.
	That is important.

Michael Weir: Paragraph 14 makes the point that, under the LINK network, the nearest free ATM, apart from that in a post office, can often be many miles away. If that post office goes, it will be difficult in rural areas to get free access to cash.

Peter Luff: I am grateful to the hon. Gentlemanmy hon. Friend for these purposeswho is a valuable member of the Committee, even though he was not with us last week; I believe that he had other business in Glenrothes. However, he makes an important point, which I would like to have made, if I had time. Our report is short, but I cannot read it out in 10 minutes, even at the speed at which I normally speak.
	Only the Post Office offers guaranteed access to cash. The ATM network cannot be guaranteed, because many of those machines are located in post offices that might close if they do not get the Post Office card account business. Only the Post Office has the cash and transit operation to take the cash to the post offices so that it is there when pensioners, whose most basic financial inclusion right is having access to cash, want it on a Monday morning. There is no guarantee that any other provider could deliver the cash at the moment that it is needed. In our view, that is a crucial criterion.
	The problem appears difficult for the Secretary of State to resolve, but I do not believe that it is. I am pleased that he remains in his placeit is typically courteous of him to be here, listening to the debate, rather than leaving after making his contribution, and I greatly appreciate that. There is a solution. The contract has been advertised on the basis of the most economically advantageous tender. That is important, because it is not a simple question of cost. Even if one bidder offers a cheaper option than another, the Secretary of State has the right to choose the one that will give the best overall result. As the report states:
	This allows the Government to take a wide range of criteria into consideration. It must do so, to ensure that easy and reliable access to cash and access to benefits remains possible for those who currently use the Post Office Card Account.
	We had an exchange about access criteria during the Secretary of State's remarks. Those criteria should underpin his judgment. Anything that falls short of them is, according to the Government's judgment, inadequate and wrong.
	We conclude our report by saying:
	There is very little time for the Secretary of State to come to a decision, but when he does so he must take the needs of POCA users, and of the community as a whole, fully into account.
	It would be strange, when this country is in a recession and many thousands of small businesses face a difficult and challenging time, for the Government, who claim that they support small businessesthey did so in the amendment to the previous motionto make a decision that directly threatened the future of at least 3,000 businesses.
	I do not understand the reason, but the Department for Work and Pensions and its predecessor have never liked the post office network. Those of us who were Members of Parliament between 1992 and 1997 remember that the Conservative Government played with the same idea and speculated about ending payments through post offices. There was a huge outcry from those of us who then sat on the Government Benches and the Government quickly retreated, realising the error of their ways. Clearly, civil servants in the then Department of Social Security kept the idea in the back of a drawer, brought it out and offered it to a new set of Ministers, who willingly and unthinkingly embraced it. They were wrong to do so. The civil servants in the Department have something against the network. It is the job of Ministers to say No. There is something immensely important and valuable here that we mustn't allow the country to lose.
	I therefore say to the Secretary of State: fight the prejudice and enable the Post Office, which has fine new leadership, strong commercial ambitions and a genuine prospect of making a go of it again in the harsh new environment in which we live, to succeed. Please help the Post Office do thatdo not get the decision wrong.

Lindsay Hoyle: I welcome the opportunity to speak in this debate. The motion that the Liberal Democrats tabled is a carbon copy of the early-day motion that I tabled on 9 July. I am only sorry that naked opportunists did not have the decency to tell me that they intended to copy my early-day motion. That is the least that should have happened.
	Two overriding concerns motivated me to table the early-day motion on 9 July: first, the future viability of the post office network and, secondly, the future of the Post Office card account. Those two issues were at the forefront of my mind. I must tell my right hon. Friend the Secretary of State that there is no way that the majority of hon. Members support any body other than the Post Office delivering POCA 2. I cannot speak strongly enough in favour of POCA 2 coming through the post offices. Indeed, the decision is such a no-brainer that we should not even consider anybody else distributing POCA 2. There is no way we will accept anything other than the Post Office.
	I say that to make it clear where we stand now and where we will still stand when the issue comes back to us. I know that my right hon. Friend will get that message and that he has taken it on board. We have all sent letters to the Prime Minister to ensure that our voices are heard as Back Benchers and, more importantly, that our constituents, whom we represent and who are the users of the Post Office, have their voices heard loud and clear. That is the point that I want to make this evening.
	This debate is about our concern and using our best efforts. We have to ensure that pensioners and people on benefits have that choice. We have had that reassurance this evening, and I was pleased to hear that from the Secretary of State who is listening. He is willing to ensure that people know that POCA is available and can use it. I am pleased to hear that, because it is very important that we do not strangle the system or turn off the oxygen to POCA.
	POCA is important because the Post Office is so dependent on that business. Whether the figure is 2,000, 4,000 or whatever, as many as 80 per cent. of post office counters throughout the UK could close without POCA 2. That is what we are talking about. It is why 2010 is so important, and why I am pleased that my right hon. Friend has said that he will advertise POCA.
	It was key to get something from the Secretary of State this eveninghe said that he would look to set up a taskforce, and that is important. A taskforce is needed to find the extra work for the Post Officereal work and real alternatives, because however strongly I or the rest of us in the House might feel about POCA, it is short term. POCA is not the future of the Post Office. That is where we are failing.
	We are talking about a short stay of executiondeath by a thousand cuts eventually in the post office network. The problem is that as more people retire, the older generation that uses POCA is dying off and the new people coming into the system use their bank accounts. They do not go near a post office. We have to find an alternative, so that people will go back into the post offices. We have to find the work and bring it back into the post offices.

Peter Luff: I am grateful to the hon. Gentleman for giving way, as he gives me the opportunity to pay tribute to his excellent work on the Committee on which we both serve and which I chair. Does he accept that Post Office Ltd has a plan to do precisely what he describes, but that POCA needs another five years to enable it to work? If Post Office Ltd gets those five years, it can do exactly what he says and move on. That is what we need to work towards.

Lindsay Hoyle: The hon. Gentleman is the Chair of our Committee, so how could I disagree with him? That is what I am saying: it is important that we introduce POCA 2 now, so that we have another two, three, four or however many years after 2010. However, we cannot rely on that to save the Post Office. That is why we have to come up with alternatives and go through other Departments to see what other work we can bring into the Post Office. That work must be sustainable and long term.
	I believe in the network. I believe in Royal Mail and the Post Office. I also believe in it being publicly owned, unlike the Opposition, who on the one hand say, We want to privatise the Post Office, and on the other say, We want to save the post offices. Surely they cannot indefinitely put so much taxpayers' money into a private company. There is something wrong with their argument this evening. What we need to do is look for that real alternative.
	I believe that there is such an alternative. We have invested and saved Northern Rock. We know that a true community bank operating throughout the country is lacking. That is a system that we could use, by introducing a community bank that would offer all the services to the people who cannot access them unless they go through the internet or are willing to travel to the nearest town. We will replace the banks that have been lost throughout the towns and villages in this country. We now have a great opportunity to do just that. We can sit down, look to the future and find the right formula for introducing a community bank, because that is what is lacking. It is also lacking for businesses. Why should the few remaining milkmen, for example, have to bank their money in the town, when they should be able to bank at the post office? There are many small businesses that could use a Post Office bank, and this proposal is about putting such a bank in place and giving people a real assurance of the future.
	I also want to tell the BBC, which is quick to tell us that it wants more money for the TV licence, that I want to get my TV licence from the post office. What right does the BBC have to take that ability away from us? That was an absolute disgrace, and a complete shambles. It is willing to take taxpayers' money, yet it is not willing to support taxpayers' business through the Post Office. Those are wrongs that we can put right. They are the things that can really begin to save the post offices. Yes, we can do so much.
	Will I be supporting the Liberal Democrats tonight? Will I heck as like! This is the cheek with which they operate. They really have not given us an alternative, and they will never do so, because they are not going to be in government. What they have not told us tonight is that their motion is a copy of my early-day motion, which aimed to ensure that the Government were getting the message. That message was: rethink, look again and deliver. Supporting the Liberal Democrats tonight will not save anything; far from it. I have achieved more by saying this tonight from these Benches than they have done. We have already reached agreement on a taskforce and on the advertisement of POCA. We have made great strides tonight, and that is because we are willing to fight for the future of the Post Office. If people are serious about voting to save the Post Office, they should not follow the Liberals into the Lobby tonight. If they are serious, they should back the Government, who are willing to listen.
	I give the House the assurance that I will continue to fight for the Post Office and for the future of Royal Mail, because I believe in them. I believe in the work that we have done on the Business and Enterprise Committee, and I believe that what we did under the Department of Trade and Industry was right. We have got it right, and what we need now is for the Government to listen. I believe that they can do that, and I am with the hon. Member for Mid-Worcestershire (Peter Luff) when he says that there is only one alternative: it is the Post Office and it is Royal Mail. I say to the Government: please listen, and please deliver. Let us back the Government tonight.

Greg Mulholland: It is a pleasure to follow the impassioned plea made by the hon. Member for Chorley (Mr. Hoyle). I enjoyed his speech, as I often do, although I cannot understand his logic, which reflects the Government's lack of joined-up thinking and their contradictions over this whole issue. It illustrates their inconsistency, accompanied by a real lack of leadership and will. We have seen service after service withdrawn from the post office network over the past few years, and the services that remainon which the post offices rely absolutelyare not advertised. The hon. Gentleman made that point in his speech.
	The Government underestimate the public's anger and sheer exasperation at the way in which they have handled the post office network in recent years. They also underestimate the exasperation of the people who are running our post officesthe sub-postmasters. My constituency has suffered over the past few years, as has every other area in the country. In 2004, we lost four post offices, and in 2008 we lost another three. None was reprieved, although we have a rather surreal situation at Bramhope in that the Post Office now says it will sit down with the local parish councillors to talk about whether a local consortium might be able to open a post office, even though it has let the closures go ahead. That is another case of an extraordinary lack of consistency and joined-up thinking.

Lindsay Hoyle: The hon. Gentleman and I support the great game of rugby league, and we also support and believe in the Post Office. Does he not agree that he should not be proposing to privatise the Post Office, because that is not the future? This illustrates his inconsistency. He wants to support Post Office Counters but, at the same time, he wants to privatise Royal Mail. Does he not agree that that will not work?

Greg Mulholland: The hon. Gentleman and I agree on many things, and I am sure that we both felt real hurt over England's woeful performances in the rugby league world cup. I am sure that we both agree that England will improve hugely in the semi-final at the weekend. However, he does not actually know what Liberal Democrat policy is on this issue [ Interruption. ] Let me make it very clear, so that he and others can understand it: our policy is simply to inject a large amount of private capital into Royal Mail and properly support it, and to leave the post offices and let the network continue.  [Interruption.] It is what is called the proposal for enabling the network to continue. Nothing has been proposed by the Conservatives, and the Government have eroded the network over recent years. I will take no lectures from Labour Members.
	Never mind the voices of politicians chuntering from sedentary positions; let me allow the voice of those who run our post offices to be heard properly in the debate. I was approached by Sandra Jarvis, sub-postmaster of Ireland Wood post office in my constituency. She said that the Post Office card account was very important to her business, adding:
	Withdrawal of the Card Account from the Post Office network, will mean that thousands of people nationwide will have to draw their monies from where? High Street Banks (that's if they qualify to open bank accounts)? Paypoint outlets, supermarkets?
	She went on to say:
	The Government have chiselled away at products serviced at the Post Office over the years, with the loss of many transactions: TV Licences, DVLA Motor Vehicle Licensing... and savings stamps, to name a few.
	Cessation of the Card Account at the Post Office will have the knock on effect of us losing utility payments also... Gas, Electric, Water, Rent and Poll Tax payments. Many Pensioners /Unemployed pay their weekly bills upon receipt of their monies from us, which equates to several thousand pounds per week.
	That will hit them, she says, and
	will hit my business badly.
	She asked:
	Where do the customers go if the Card Account is taken from us? How do they get there?
	Those are questions that the Government simply have not addressed.

Mark Williams: Is not the question Where will people go? particularly relevant to the most rural and isolated communities in the country? As for access to supermarkets and other shops, for many of those communities the last shop has gone as a result of the recent closure programme. People cannot gain access to benefits through shops because they have all gone, and there is no public transport. What is my hon. Friend's solution?

Greg Mulholland: I entirely agree, and I pay tribute to what my hon. Friend has done in regard to rural issues in his community. Let me give another example of the lack of joined-up thinking. I think we would all agree that the Sustainable Communities Bill was an excellent idea, but the Government's action is eroding precisely what it aims to do. Sandra Jarvis also asked:
	Is this the objective of the Government, in order to save on the subsidy it pays out to the Post Office?
	I shall restrict my comments in order to allow others to speak, but let me say a little about the most vulnerable members of society. I refer to older people, disabled people, and people who find it hard to access services: people with learning difficulties and people with mental health issues. Those people were marginalised in the so-called network change programme. The Post Office spin doctors came up with that extraordinary phrase to describe what was, in fact, a closure programme. How very new Labour! Now the same people have been marginalised by the confused process involving the Post Office card account. The issues relating to access have been glossed over again.
	Has there been any assessment by the Department of the impact that its action will have on the lives of people who need to obtain the many benefits and services that they may need? There has not, and that is, quite simply, a scandal. Figures from Age Concern reveal that 76 per cent. of older people fear that they will lose essential services if there are more closures, 73 per cent. fear that they will not be able to access similar services in the local area, and 88 per cent. would have to make special travel arrangements to reach alternative services.
	A pensioner in my constituency to whom I spoke on Friday, Mr. Wilf McCombe of Bramhope, simply does not understand why the Government will not allow the Post Office to continue its card account. He said that one of the wonderful things about the accountlet us concentrate on the positiveswas that pensioners could go anywhere in the country to pick up their pensions from the post office. That is very useful when he is away on holiday or visiting relatives. He also not only made the point that people feel that through POCA they can access services in post offices they know and trust, but asked where the machines will be sited if the contract goes elsewhere. They will be sited in places that older and vulnerable people do not necessarily know or feel comfortable accessing, and they will probably simply not want to do so. Awarding POCA outside the Post Office will therefore be a blow from a business point of viewapart from the clear absurdity of doing that when it is supposed to be called the Post Office card account, as several Members have pointed out.
	We know there is a particular problem for older people and the most vulnerable. We have heard about the issues for rural areas and deprived urban areas, but there are pockets of people everywhere who will find that the problems of access mean that they might not leave their homes. As Sandra Jarvis said:
	The Card Account holders at my office are Pensioners and the Unemployed, and for many of them it is the Social centre to come to the Post Office (and in the case of Pensioners perhaps the only time in the week that they get to leave their homes and speak to someone).
	That is not being taken into account.

Mark Williams: My hon. Friend has talked about rural areas and about deprived areas. I represent a convergence zone area that receives funding from Europe, because Ceredigion is both rural and deprived. Does my hon. Friend agree that the problems to which he alludes are exacerbated in areas such as my constituency?

Greg Mulholland: That is true but, equally, what about areas such as Otley, north of the river? It is not necessarily a deprived area, yet the wonderful work done by Otley Action for Older People will be undermined by the recent closure of Newall post office. People in that area will simply not be able to access the services they need. The simple fact is that if the Post Office loses this tender, that will leave huge numbers of older people both financially and socially excluded.
	The Government have not faced up to the reality that if they do not follow through and ensure that the post office network is the recipient of POCA, that will sound the last post for a genuinely national post office network, as 3,000 more post offices have been predicted to go, which would leave about 8,500. That is simply not a sustainable amount, so the post office network will not be able to continue.
	I shall conclude by specifically addressing my friend, the hon. Member for Chorley, by saying that although he does not feel he should vote with our party this evening, the reality is that this is the last opportunity this House has to send a clear message about POCA. Labour Members are all too happy to march in local protests against post office closures, but they have the chance this evening to put their money where their mouth is and to march into the Lobby with Members from across the Opposition Benches to send the clearest possible message we can from this Chamber that POCA must be retained with the Post Office, as the consequences of not doing so are grave.

Kate Hoey: As chair of the all-party group on post offices, I want to say that there has been considerable all-party support on this issue over a period of time, and it is sad that, although there is a huge amount of agreement on it in all parts of House, we all have to start playing a bit of party politics when it comes to the votealthough I suppose that that is what this place is like.
	I say to my hon. Friend the Member for Chorley (Mr. Hoyle) that imitation is the sincerest form of flattery, so he should not be too upset that the wording is precisely what we all signed up to. I also want to say that the report by the Business and Enterprise Committee that came out this morning and the previous reports produced under the chairmanship of the hon. Member for Mid-Worcestershire (Peter Luff) have been very good indeed, not just on this issue, but on all the issues. Of course, my hon. Friend the Member for Chorley is also a member of that Committee, so I am praising him, too, there. The National Federation of SubPostmasters is very concerned about this issue, and tomorrow afternoon it will be contributing at an emergency meeting of the all-party group, so Members might want to come along to that.
	No one listening to this debate will understand how we as a Government and a country can have spent the period from March, when the tender process closed, until now with all this uncertainty and lack of transparency regarding the contract tender. That seems amazing in this day and age. I know that there are rules governing the various aspects of tendering, but there must have been a lot more that we collectively could have been told. I still do not understand why we needed to tender the contract, and I will not accept that we needed to.

Robert Flello: Does my hon. Friend share my puzzlement at the fact that in 2003, when we introduced POCA, as far as I am awareI may be wrong and I stand to be correctedwe did not tender it then?

Kate Hoey: I agree with my hon. Friend, but I expect that somebody somewhere will say that some new European regulationI am sure that we in this Chamber did not vote for itcame through at some stage saying that we must do this. The Secretary of State mentioned the Republic of Ireland. Yes, its Government were taken to court, but the decision was unproven, so they got away with it, if we want to put it like that; I would say that they stuck up for their citizens, which is what our Government should be doing. It is time that we stood up to some of the ludicrous rulings and directives that come from the European Union. Instead of making people feel that the Union is helping them, such measures make them feel that all the Union cares about is a bureaucracy at Brussels that is telling people in this country how to run their lives. However, I do not want to get diverted into that.

Katy Clark: My hon. Friend is of course aware that the Government recently set aside the competition regulations in relation to HBOS and Lloyds TSB. Given the importance of the post office network to the whole country, does she agree that this is a matter of overwhelming social significance and an overriding public policy reason why the competition regulations should be set aside, and that we should not have entered into this tendering process?

Kate Hoey: I absolutely agree with my hon. Friend, and I still have not had a proper answer to that question; perhaps the Minister will return to it in summing up.
	I may be wrong, but I suspect that discussions are going on between Departments about this issue. Clearly, there has not been a unified view. We will obviously get a unified view at the end of the process, but it should come very quickly indeed, and I hope that it will be in line with what the vast majority of Members have said tonight that they want to see happen. As everyone has said, winning the POCA contract will not be a solution to the many future challenges that the post office network will face. However, it is absolutely crucial because it will provide the extra breathing space that will allow all the extra work that needs to be done to bring in extra services, including the various new services. Some are ready, but a lot more work needs to be done on others.
	We will therefore need time, and if the POCA 2 contract does not go to the Post Office, we all know that that will be the end of at least 3,000 post offices, not just in rural areas but in areas such as mine. I and my local community worked very hard to save a sub-post office in Lambeth walk from closure under the recent changes. It was such a vital thing to save that everybody put in a huge amount of work to make sure that that happened. There is absolutely no doubt: if that post office does not have the card account, it will close. I cannot understand how any common-sense Government or politician could not want to do everything that they could to keep the contract with the Post Office.
	I remind those who go on about bank accounts that although some of our older people perhaps now have bank accounts, they still want their Post Office card account. Many pensioners in my constituency would not dream of having a bank account. The POCA and the cash that they get out is very much part of their budgeting processthey know that they are getting the money at a particular time on a particular day, they know how they are going to spend it and they know that they will get it again the following week. No bank account will give them that feeling that they have their albeit limited cash; they want to have access to that cash on their terms.
	I know that many hon. Members from all parts of the House want to speak, so I shall merely add that the Government should not go around saying that the only way in which we will save the post officesthis is almost being used as a blackmailis through identity cards. I am determined to do everything I can to prevent ID cards from being introduced in this country. Even if they were the only way to save the Post Office, I would not support them. It is a pity that reference is made to them in the Government amendment.
	The Government should not have tendered in the first place, but when they did so, they should have ensured that all the parts associated with the tendering showed that this was a public service, that it had a social benefit and that it did all the things that my hon. Friends have mentioned tonight. Let us hope that tonight's debate will be the last time that we have to debate this and that the Government see the sense of what we are sayingI do not care how they do it. The countrynot just politicianswill not forgive any Government who allow this service of value to the Post Office to be taken away from it. We have to keep the POCA with the Post Office.

Elfyn Llwyd: Perhaps I should declare an interest, because my sister runs a sub-post office in the village of Eglwysbach, where she also has a small shop.
	I pay tribute to my hon. Friend the Member for Angus (Mr. Weir), who has done a lot of hard work on the Select Committee on Business and Enterprise. I fully endorse everything that the Committee said in the report that it published today and also what the hon. Member for Vauxhall (Kate Hoey) had to say. It just goes to show that there is all-party support on this matter. I speak for Plaid Cymru and the Scottish National party, and for members of the Labour, Conservative and Liberal partieswe are all agreed on this matter. There is a huge amount of feeling on it, and for good reason: the Post Office is a brand that we have all trusted and that we all know to be honest and forthright, and we need to maintain it at all costs.
	As has been said, hon. Members have bank accounts and can make choices, but others cannot do so. For example, there are 4,480 Post Office card accounts in my constituency, 8,000 in Clwyd, Southin north Wales7,500 in Caernarfon and 8,140 in Ynys Mn. Those are big figures for small rural constituencies. It has been pointed out that losing the POCA would be a disaster for rural areas. My home village of Llanuwchllyn near Balathe name will be a challenge for somehas one shop, which is a sub-post office. It will be lost and we will lose the only outlet in our village. There is a social side to this. Some of us have cars, but others do not and they will have to rely on relatively expensive public transport to travel five miles to the nearest town just to get the basics of life. That is unfair and we can reverse that situation. The Post Office needs some breathing space to enable it to do this workwe need this card account to remain where it is. I, for one, cannot understand what possible benefit will ensue if it is sent to a private concern.

Peter Luff: Does the hon. Gentleman agree that, in a sense, we are trying to save the Government from themselves? The access criteria will guarantee only 7,500 post offices, but on 24 January 2007, when the then Secretary of State for Trade and Industry, now the Chancellor of the Exchequer, came before our Committee, he said that
	if you do not have about 12,000-odd post offices you will not get the national network that we need.
	We are trying to save the Government and ensure that they get what they say they want.

Elfyn Llwyd: That is absolutely right. The Chairman of the Select Committee knows everything about this subjectperhaps not everything, but he knows a lot about it, and more than I do.
	The other point that was made earlier related to the effect on other local businesses, and we need to consider that telling fact. We have bandied a lot of figures around this evening, but it is crucial that we maintain and develop this network for the future. We have seen double standards on this issueCabinet Ministers are voting for the closure programme but are then protesting vocally in their own constituencies. I will not call that anything stronger than double standardsthere are other words, but I would probably be ruled out of order if I used them. If POCA 2 is not awarded to the Post Office, I believe that the situation will get quite near to being hypocritical. I hope that we will not see that act of betrayal towards those hard-working men and women who run the sub-post officesoften for long hours and little return. Yes, they are economic enterprises, but they also offer an important social service.
	I asked the Secretary of State earlier about the access criteria and the tendering process. The point that I made about the Welsh Language Act 1993 was simply that the Act would cover the public delivery of a public service. If a private concern were to deliver the service, it would not be covered. The tens of thousands of people in Wales who would wish to access services in the medium of Welsh, as they do currently, will undoubtedly be denied. There will be no legitimate expectation that the organisation running POCA 2 should deliver that service. That is extremely important. If the Welsh language is undermined, there will be huge repercussions, not just in this place but in the National Assembly and elsewhere. Acts of Parliament in this place have been made to secure the future of the Welsh Language Act. This move will undermine it, and it is wrong.
	There has been a huge amount of agreement on both sides of the Chamber this evening. I hope that Ministers will listen, as we have all put aside our political badges. We are all concerned about the future of our network. In those circumstances, I hope that we can have a positive announcement shortly to put many people out of what appears to be their misery as they worry about the future.

Andrew Stunell: There is a glint of light in this debate, through the smoke and mirrors, from those on the Government Front Bench. They seem to have moved from hostility to uncertainty, and surely that is good as far as the card account is concerned. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), with his customary disingenuousness, suggested that the card account had been introduced by Labour along the lines of the national health serviceas a miracle cure. May I remind the House that Labour brought the account forward with the greatest reluctance, because it was compelled to do so by the pressure in this House and in the country?
	As soon as the account was introduced, a series of bullying and inaccurate letters were sent to anyone who dared to apply for one, telling them to do something else. Of course, if that did not work, that letter would be followed up with a telephone call. I know that, because I have the letters and because my wife received the telephone calls. However, there was still massive take-up. Some 4 million took out the card accounts. Even this yearit might have been a clerical error, but it was an extraordinarily consistent clerical erroranother letter went out, once again telling people that the card account was going to stop and that they should make alternative arrangements.
	Despite all that, in the borough of Stockport, 18,000 people are on the card account5,000 in my constituency. I want to tell the Minister and the Secretary of State that the nine post offices that they have left me with get, between them, about 30,000 a year of income from their handling of those accounts. That is equivalent to 50 per cent. of their business rate. If the Secretary of State takes that away from them, he will be putting a 50 per cent. hike on their business rate. They will go down. Whatever might be said about a move from hostility to uncertainty, that uncertainty is itself no help.
	The Secretary of State quoted from a letter that he had received from Mr. Thomson of the National Federation of SubPostmasters. However, he did not quote some of the other parts of that letter, including the phrase
	uncertainty over the POCA is destroying subpostmasters' confidence.
	The Government face a doubled-edged problem.
	Since the card was introduced in 2003, my constituents who have card accounts have resisted every threat and blandishment to switch to private sector retail banking. During most of that time, banks were the UK's totemic success story, yet still my constituents did not want to switch. Some could not switch because they did not have the necessary credit rating. Many are unable to switch, because of mobility or disability problems, and for some of the other reasons that have been given already. Now that banks have never been more distrusted or reviled or more in disgrace, along come the Government, telling my constituents, Leave the safe haven of a simple public sector system based on your local post office and put your trust in a nice big bright shiny bank where you can make a small contribution to a fat cat's big bonus.
	The other edge of the problem is the banks themselves. I shall briefly mention two cases. The first concerns a constituent who has recently had a stroke and can no longer write his signature with his right hand. He wants to cancel his account but the bank will not accept the cancellation because his signature is wrong. What sort of bank will not cancel a card because a signature is wrong? My constituent was told that he could get power of attorney. Brilliant. It is not his mind that has gone, but his handwriting.
	The second story is about an elderly lady who moved to live with her family and tried to switch money from her savings account to her current account in the bank she has used for 45 years. She was refused because she has a new address, is not on the electoral roll and has no utility bills, so the bank thought she might be a money launderer.
	I have to tell Ministers and the Secretary of State that it is not just that my constituents do not want the retail banking sectorthe retail banking sector does not want them. It is ironic that while UK banks went broke lending billions, perhaps trillions, of pounds to sub-prime citizens of the United States of America, a United States bankCitibankwill be moving in to pick up the sub-prime accounts of my constituents via POCA 2.
	In 1999, a revolt in the House forced the Government to set up POCA. In 2006, when the Government said the account would be cancelled, a second revolt forced them to continue it. We need a third revolt to make POCA permanent. The quality of life and convenience of POCA users must be maintained. The quality of our communities must be maintained. Retaining POCA is the way to do it.

Edward Timpson: I am grateful for this short opportunity to speak in an important debate on an issue that is so long-running that a positive outcome for the postal service and postal workers seems more distant by the day. The sooner we have a conclusion to this fiasco, the better.
	The context and backdrop for the debate is the Government's long overdue decision on the Post Office card account. In 1999, there were 25 post offices in Crewe and Nantwich; we now have 11. A large swathe of the south of Crewe has no post office at all. The town of Nantwich, with a population of 12,000, now has only one post office. We need to remember that backdrop when we look at the future of the Post Office card account.
	Why have the Government decided that the postal system is so unfit for purpose that they are considering trying to clip its wings even more? They claim support for the Post Office card account in their amendment, yet all the while they are encouraging customers to bank elsewhere. They seem either unwilling or unable to tell us who will run the second phase of the Post Office card account. I suspect that when they had the opportunity to make that decision in May they decided to put it off for other reasons.
	The card account is only the tip of the iceberg; other services are being stealthily withdrawn from the sub-postmaster's realm. We have heard about tax discs, and that renewal reminders do not even point out that the service is available at the post office.
	In my discussions with members of the Communication Workers Union in Crewe, I have been told that confusion still remains about the Government's policy on the Royal Mail, so this evening provides an opportunity for the Minister to clarify exactly what the Government see as the future role of the Post Office and whether the Post Office card account will be there to safeguard the future of those people. On behalf of my constituents, I therefore urge the Government to take a step back, to halt the post office closure scheme and the sorting office closure schemes, of which Crewe is a victim, and to sit down with the CWU to discuss a manageable and national strategy for the Royal Mail, rather than trying to dismantle it piecemeal. We need to review what services community hubs could offer people, rather than just taking them away, and to renew the Post Office card account to ensure that the Post Office has a safeguarded future. At the moment in Crewe and Nantwich, it really does seem that the Government are only there to take things away.

John Thurso: This has been a good and timely debate, and I hope it has served to make clear to the Government the strength of feeling on both sides of the House and how much all hon. Members value their post offices and the part that the Post Office card account plays in maintaining their post offices and their footfall. Indeed, even the Secretary of State made that point.
	My hon. Friend the Member for Cardiff, Central (Jenny Willott) made an eloquent case in opening the debate. She was generous in taking interventions, which allowed many hon. Members who were not able to take part in the debate to make a point. She went straight to the heart of the matter: whether the Government should be allowed to kill the Post Office by slow stages or whether the Post Office should be helped to transform into a 21st century servicea point that the Secretary of State failed to address. Indeed, the highlight of his contribution appeared to be to tell us that a purely commercial post office network would consist of only 4,000 post offices. I wonder whether that is actually the DWP's target. However, I welcome the fact that he has promised us a statement, and I hope that it will be the statement that we would all like to hear. I also hope that he will take away from the debate the strength of feeling in the House.
	The hon. Member for Chorley (Mr. Hoyle) made the point in a customarily passionate and excellent intervention that we all want the card account. There is no hon. Member on either side of the House who does not want the card account and who does not want it to go to the Post Office. He made the valid, absolutely telling point that that is not because we particularly like the card account, but because our constituents tell us it is what they want and need. He and the hon. Member for Mid-Worcestershire (Peter Luff) have produced an excellent reportsuccinct and to the point, with very good, albeit not bold, pointsthat goes to the heart of the matter.
	I was glad that the hon. Member for Mid-Worcestershire referred in his report to the work done by the Treasury Committee. Indeed, he quoted extensively from it. When I was serving on the Treasury Committee, we went into this in considerable depth. One of the interesting points was a question that I asked of an official on the comparison of cost between the Post Office card account and other services, and the answer was that it is an apples and pears comparison: the two costs are quite different. We should take that point on board.
	The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), whom I like to think of as a friend if not a right hon. Friend, was his usual self. He made two charges of me. First, he accused me of sending him reams of Focuses, to which I plead not guilty. I think that he knows me well enough to know that that is not my style. Secondly, he accused me of being an opportunist, and I plead guilty. I take every opportunity I can to support my constituents. I took the opportunity before POCA was announced to ask the Government to change their mind about the evisceration of post offices. I took the opportunity to support POCA when the Government did not want to introduce it, and I take the opportunity now to ask the Government to give us POCA 2.

Gerald Kaufman: I certainly regard the hon. Gentleman as a friend for giving way. I was accusing not him of distributing Focusesthey would get lost in his vast constituencybut the hon. Member for Manchester, Withington (Mr. Leech), who remains absent from this debate, as he has from the entire debate, as we shall make clear in Manchester.

John Thurso: I shall remain as free with my remarks as the right hon. Gentleman is with his.
	We heard two excellent Liberal Democrat Back-Bench contributions from my hon. Friends the Members for Leeds, North-West (Greg Mulholland) and for Hazel Grove (Andrew Stunell). They made it clear why hon. Members on both sides of the House feel so passionately that Post Office card accounts should be allowed to continue for a second generation.
	We want post offices not simply because we want post offices, but because they are economically valuable and provide a social good. As many Members have said, in rural parts of the world, post offices are the only place where many services are available. I will not bore the House with a recitation of the small villages in north-west Sutherland or the middle of Caithness that would have no opportunities if POCA 2 were not given to the Post Office.
	There is an opportunity here for the Post Office. In all my discussions with representatives of the post officesthe sub-postmastersthey say that they want post offices to transform. They want to provide a 21st century post office that can be profitable. However, they need the breathing space to get from here to there. That is what is absolutely critical about the award of POCA 2. Indeed, sub-postmasters have very good plans to make the post office a post bankplans that I think many Members present would support.
	There is another point that we should take on board. The Department for Work and Pensions has been closing offices left, right and centre, including in my constituency. People now have to travel for three hours, in places where there is no public transport, to attend a face-to-face interview. They have grave difficulties, and I could tell many stories about that. Post offices and sub-post offices are operated by literate, numerate, intelligent people. Why not use them as the front line for the delivery of services to the citizen? Why not give allow them to help fill in forms and explain matters? For a very modest cost to the Department, there would be a massive increase in the quality of service. People would not be forced to spend many hours on the telephone to Clydebank, and would not end up with the wrong answer at the end of it all.
	At the heart of this debate are the needs and desires of some of the most vulnerable in our society, including pensioners, the unbankedfinancial inclusion is an important point that has been brought upthe disabled and all those on benefit. They trust their local post office to help them. Trust is a word that has come out in many contributions this evening. The Post Office, postmasters and postmistresses are trusted. It is that human contact that is missing, but that is so important to many people. Our constituents do not want to spend hours on a telephone, only to be given the wrong answer, or put on to another department when they finally get through.
	Our constituents value and want to maintain their post offices. They do not trust banks, and they have proved to be absolutely right in that. However, they do trust the Post Office. The replacement card account contract is wanted by the customers, our constituents. It is vital to the future of the network and supported by the vast majority of Members on both sides of the House. The Government have been overseeing the systematic removal of business from the post offices, and it is time to stop. It is time to support the Post Office and allow it to adapt to the 21st century. For that, Post Office card account 2 is needed, and needed by the Post Office.

Rosie Winterton: This has been a passionate debate about an extremely important issue that affects all right hon. and hon. Members, wherever we are from and whatever party or constituency we represent.
	As many right hon. and hon. Members said in the debate, the post office is a treasured and essential cornerstone of local communities throughout the United Kingdom, it is trusted and understood in ways that other services are not and it is not to be treated as a purely commercial service. I assure the House that decisions about the Post Office will be taken respecting that unique situation and focusing on the importance of our post offices to the lives of the many millions of our constituents who use them every day.
	Many Members have spoken this evening, and I shall endeavour to respond to their contributions as time allows, but I begin by explaining why the Government disagree with the Liberal Democrats and why I urge the House to support the Government's amendment. First, the Liberal Democrats state that the Department for Work and Pensions has written to all Post Office card account holders informing them that the contract will end. That is not the case. We have not written to POCA holders saying that.
	Secondly, the Liberals contend that we have instructed people to switch out of their Post Office card accounts. That is not the case. On the contrary, we are opening 12,500 accounts every month. We have written to customers who are paid by cheque and encouraged them to move to payment into an account, including those that can be used at a post office, for the simple reasons that it is more secure for the customer, it reduces fraud and it is more efficient. We will provide a successor to chequesa better and safer product that will be easier for people to operate; but, there will be no compulsion on people using cheques, and there are certainly no instructions as the Liberal Democrats have suggested. As my right hon. Friend the Secretary of State made clear earlier, however, we have changed the leaflet referred to, listing the Post Office card account alongside other bank accounts that are available at Post Office branches.

Kate Hoey: The Minister says that that aspect of the Liberal Democrat motion is not true, but what is it about some staff who, whatever is said on paper, seem in telephone calls and in other ways to make it clear that they do not want people to have a Post Office card account?

Rosie Winterton: My hon. Friend makes an important pointthat it is right that our communications are clear, particularly from staff. Obviously, we need to take that into account.
	The hon. Members for Cardiff, Central (Jenny Willott) and for Caithness, Sutherland and Easter Ross (John Thurso) made several points setting out their case, many of which my right hon. Friend the Secretary of State addressed. However, I want to take this opportunity to clarify that it was the BBC, not the Government, that decided that the contract for the licence fee should not go the Post Office.

Lindsay Hoyle: I welcome that comment about the BBC. We all know that the BBC was wrong and that it has got to put the situation right, but is my right hon. Friend aware that we need training to ensure that people who answer the phone get across the message that the Post Office card account is open for business and that the Post Office wants to do business? We may need some extra training to ensure that people understand the message that they give out on the phone.

Rosie Winterton: My hon. Friend is right to say that training is an important aspect of getting communication right.
	The hon. Member for Epsom and Ewell (Chris Grayling) asked what more could be done in terms of services provided. My right hon. Friend the Secretary of State assured my hon. Friend the Member for Chorley (Mr. Hoyle) that he will set up a task group of MPs to work with the Government to identify new business opportunities for the Post Office, and continue to work with the Department for Business, Enterprise and Regulatory Reform.
	My right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman), in his usual thoughtful and witty way, set out his support for the Post Office card account and sent out a search party for one of Manchester's other Members. My right hon. Friend emphasised the account's public service element, reminded us that a Labour Government established the account in the first place and pointed to the cynical opportunism of the Liberal Democrats.
	In a speech that reflected the depth of his understanding of the issue, particularly following his Committee's report, the hon. Member for Mid-Worcestershire (Peter Luff) made intriguing comments about better ways of attacking the Conservative party. Frankly, we have enough to go on at the moment, but we certainly look forward to more advice from the hon. Gentleman in that regard. At least he said that it was necessary to subsidise the Post Office; his party's Front Benchers refuse to commit to that.
	My hon. Friend the Member for Vauxhall (Kate Hoey) spoke of the work of the all-party group on sub-post offices and the role of sub-postmasters. The hon. Members for Hazel Grove (Andrew Stunell) and for Crewe and Nantwich (Mr. Timpson) spoke of their constituents' concerns about access, and the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) talked about the Welsh language.
	My hon. Friend the Member for Chorley spoke powerfully about the opportunism of the Liberal Democrats. He referred to the task group that the Secretary of State has agreed to set up and thanked the Secretary of State for the assurance that we will do all we can to ensure that we advertise the Post Office card account effectively. I reiterate that assurance.
	The hon. Member for Leeds, North-West (Greg Mulholland) said that Labour Members did not understand Liberal Democrat policy on the matter being discussedbut who on earth does? The only thing that the Liberal Democrats have managed tonight is to make off with the early-day motion tabled by my hon. Friend the Member for Chorley, without even asking his permission.
	The Post Office has been transformed since 1997 and offers far more than it ever did when the Conservatives were in power. As the Government amendment states, the Post Office is the largest provider of foreign exchange and one of the largest providers of travel insurance in the UK. It also provides car insurance, telephone services, driving licence processing and passport application services. The current Post Office card account has played a key role in helping people make the move from having their payments made by order book to using a simple electronic account. About a fifth of Department for Work and Pensions customers use the account. Every week, nearly 4 million people use the Post Office card to collect their pensions, benefits or tax credit in cash at post offices.
	As the Secretary of State made clear at the start of the debate, we will make an announcement about the Post Office card account at the earliest opportunity. Our objective is clear: to maintain the Post Office's role while facing up to change. That is the responsible thing to do.
	I come back to the fundamental point made clear by the Secretary of State. The Post Office is essential as far more than a purely commercial service; it touches the lives of millions across the UK. That is why we have subsidised the Post Office by more than 2 billion since 1997 and why we have announced that we will spend another 1.7 billion until 2011. We have made the investment because the Post Office plays a valuable role in our society. This Labour Government will ensure that the Post Office continues to pay its unique role in British

Paul Burstow: rose in his place and claimed to move, That the Question be now put.
	 Question, That the Question be now put , put and agreed to.

Question put accordingly, That the original words stand part of the Question:
	 The House divided: Ayes 240, Noes 278.

Question accordingly negatived.
	 Question, That the proposed words be there added,  put forthwith , pursuant to Standing Order No. 31 (Questions on amendments):
	 The House divided: Ayes 279, Noes 232.

Question accordingly agreed to.
	Mr. Speaker  forthwith declared the main Question, as amended, to be agreed to.
	 Resolved,
	That this House notes the importance of the services offered by the Post Office to local communities; further notes that the Government has worked with the Post Office to make available services such as its own banking and financial services and access to high street banks' basic accounts; further notes that the Post Office is now the largest provider of foreign exchange in the UK and amongst the largest suppliers of travel insurance, car insurance and telephone services; further notes the potential for future ID management business for the Post Office for passports, driving licences and ID cards; welcomes the commitment of the Government to provide 1.7 billion of support up to 2011 to maintain a national post office network and access to Post Office products, in contrast to no subsidy before 1997; further notes the importance of the Post Office card account in helping people to access basic banking services; welcomes the decision to offer this type of product beyond 2010; further notes that this product is currently out to tender; and believes that people should be aware of the Post Office card account product alongside other methods of payment.

DELEGATED LEGISLATION

Mr. Speaker: With the leave of the House, I shall put motions 4 to 15 together.

Simon Hughes: On a point of order, Mr. Speaker. It may be helpful if I make it clear now that we wish to object to motion 12.

Mr. Speaker: In that case, let me handle it another way. With the leave of the House, I shall put motions 4 to 11 together.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Official Statistics

That the draft Pre-release Access to Official Statistics Order 2008, which was laid before this House on 21st July, be approved.

Civil Aviation

That the draft Air Navigation (Environmental Standards for Non-EASA Aircraft) Order 2008, which was laid before this House on 6th October, be approved.

Industrial Organisation and Development

That the draft Wool Textile Industry (Export Promotion Levy) (Revocation) Order 2008, which was laid before this House on 6th October, be approved.

Social Security

That the draft Social Security (Lone Parents and Miscellaneous Amendments) Regulations 2008, which were laid before this House on 6th October, be approved.

Tribunals and Inquiries

That the draft Judicial Appointments Order 2008, which was laid before this House on 6th October, be approved.

Immigration

That the draft Immigration and Nationality (Fees) (Amendment No. 3) Regulations 2008, which were laid before this House on 6th October, be approved.

Disabled Persons

That the draft Rail Vehicle Accessibility Exemption Orders (Parliamentary Procedures) Regulations 2008, which were laid before this House on 9th October, be approved.
	That the draft Rail Vehicle Accessibility (London Underground Victoria Line 09TS Vehicles) Exemption Order 2008, which was laid before this House on 9th October, be approved. [Ms Butler.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to.  Standing Order No. 118(6) (Delegated Legislation Committees) ,

Dangerous Drugs

That the draft Misuse of Drugs Act 1971 (Amendment) Order 2008, which was laid before this House on 13th October, be approved. [Ms Butler.]

Mr. Speaker: I think the Ayes have it.

Hon. Members: No.
	 Division deferred till Wednesday 12 November, pursuant to Standing Order No. 41A (Deferred divisions).

Mr. Speaker: With the leave of the House, I shall put motions 13 and 14 together.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees) ,

Children and Young Persons

That the draft Safeguarding Vulnerable Groups Act 2006 (Prescribed Criteria) (Foreign Offences) Order 2008, which was laid before this House on 15th October, be approved.
	That the draft Safeguarding Vulnerable Groups Act 2006 (Transitory Provisions) Order 2008, which was laid before this House on 15th October, be approved. [Ms Butler.]
	 Question agreed to.

REGULATORY REFORM

Motion made, and Question put forthwith, pursuant to Standing Order No. 18(1) (Consideration of draft regulatory reform orders),
	That the draft Legislative Reform (Lloyd's) Order 2008, which was laid before this House on 17th July, be approved.  [Ms Butler.]
	 Question agreed to.

european documents

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Committees),

Facing the Challenge of Higher Oil Prices

That this House takes note of European Union Document No. 10824/08, Commission Communication on Facing the Challenge of Higher Oil Prices; and welcomes the Government's support for appropriate action at the European level, where this would be effective in furthering energy efficiency, security of supply and the development of a liberalised energy market within the Union, and the Government's own response to higher oil prices, in particular the Global Energy Initiative. [Ms Butler.]
	 Question agreed to.

NORTHERN IRELAND AFFAIRS

Ordered,
	That Mr Gregory Campbell and Sammy Wilson be discharged from the Northern Ireland Affairs Committee and David Simpson and Mrs Iris Robinson be added. [Rosemary McKenna, on behalf of the Committee of Selection.]

TRANSPORT

Ordered,
	That David Simpson be discharged from the Transport Committee and Sammy Wilson be added.  [Rosemary McKenna, on behalf of the Committee of Selection.]

PETITIONS

Health (Asbestosis and Mesothelioma)

Don Touhig: I rise to present a petition on behalf of almost 600 of my constituents who call on the Government to reverse the House of Lords' decision that pleural plaques is not a disease and sufferers do not qualify for compensation. The petition has been collected through the hard work of my constituent, Mr. Brian Prosser.
	The petition states:
	The Petition of residents of Islwyn, and others,
	Declares that on October 17 2007 the House of Lords ruled that pleural plaques, scar tissue on the lungs which can be an early indication of asbestosis and mesothelioma, is not a disease and sufferers would not qualify for compensation; and further declares that the Petitioners do not agree with the decision of the House of Lords.
	The Petitioners therefore request that the House of Commons urges the Government to seek to reverse the House of Lords decision and introduce legislation that allows sufferers to be eligible for compensation.
	And the Petitioners remain, etc.
	[P000282]

Universities (Cumbria)

Tim Farron: I rise to present a petition on behalf of the residents of Cumbria, and particularly those of the town of Ambleside and surrounding villages.
	The petition states:
	The Petition of residents of Cumbria and others,
	Declares that the proposed closure of the University of Cumbria's Ambleside Campus to undergraduate students in 2012 would be a huge blow to the town of Ambleside and would remove opportunities from future generations of students.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Innovation, Universities and Skills to place pressure on the University of Cumbria to ensure the viability of Ambleside Campus for all students and to scrap the plans for its closure to undergraduate students.
	And the Petitioners remain, etc.
	[P000283]

Traffic Management (Essex)

Bob Spink: School access and parking are perennial problems for MPs to deal with, and they require careful and considerate action from councils to ensure that children are safe and local residents are not unnecessarily or unreasonably inconvenienced. In this case, although residents approached the council for help with traffic management in New Park road many months ago, nothing has yet been done. There is a consultation on yellow lines outside the school, but I urge the authorities to make appropriate changes to relieve New Park road and to help the many excellent residents who have sent this petition to me.
	The petition states:
	The Petition of Christopher Rankin, residents of New Park Road, Benfleet and others,
	Declares that access arrangements for Appleton School currently cause great inconvenience to residents and pose a danger to school children and the wider community since New Park Road is totally unsuitable for large volumes of traffic and commercial vehicles which cause safety concerns for the children who use it and cause unacceptable vibrations, adverse noise and other pollutants reducing the quality of life for residents.
	The Petitioners therefore request that the House of Commons urges the Government to change advice given on access to schools to take greater account of the needs of residents, and does urge Castle Point borough council and the Highways Authority to design a more appropriate traffic management system to protect the quality of life of all residents.
	And the Petitioners remain, etc.
	[P000284]

GLOUCESTER CITY FOOTBALL CLUB

Motion made, and Question proposed, That this House do now adjourn. [Ms Butler.]

Parmjit Dhanda: It is a real honour to speak in this Chamber on behalf of my constituents and my local football team, Gloucester City football club. The team has 125 years of history and traditionroughly the same as Tottenham Hotspur. Earlier this season, much was made of Tottenham being in crisis, before Harry Houdini Redknapp turned up and sorted out their problems. I must say that if Tottenham Hotspur think they have problems, they should see what it is like non-league, at the grass roots, where clubs really do have major difficulties to overcome. Gloucester City have had major difficulties to overcome, not least those brought about by the floods of 2007.
	As I said, the club has 125 years of history. It came into being in March 1883, and one of Gloucestershire's most famous sons refereed the opening gamea certain W.G. Grace. He was famous for playing cricket, but he refereed that game all those years ago. We have had many ups and downs over the years. In the mid-1980s1986, to be precisewe moved to Meadow Park, in the Gloucester docks area. In the 1980s we also hosted Wealdstone, who had quite an effective young left back by the name of Stuart Pearce. We do not know what happened to him since, but we went on to have some great seasons in the 1990s. West Ham United fans will recall a player by the name of Leroy Rosenior, who was our player-manager. In 1996-97, we had a particularly good season, with a great cup run. Come the very last game of the season, we were on the edge of promotion. We got the wrong result and unfortunately, Cheltenham Town got the right result for them. They went up.

Adrian Bailey: rose

Parmjit Dhanda: I give way to the Cheltenham Town fan.

Adrian Bailey: I thank my hon. Friend for giving way. As he said, I have to own up to being a season ticket holder and lifelong supporter of the arch-rivals of Gloucester City, Cheltenham Town. I offer my hon. Friend my support, as a Cheltenham supporter. I remember going, long before he was even thought of, to the old Longlevens ground to watch Cheltenham play Gloucester, and then of course to Horton road and, more recently, Meadow Park. The loss of the football ground has deprived Gloucestershire of one of the key highlights of the football season: the annual Cheltenham versus Gloucester game. A new ground would give them a tremendous boost, so that they might rise up the leagues and play us on equal terms again.

Parmjit Dhanda: I appreciate the comments of my hon. Friend, who is probably the most famous Cheltenham Town fan in Parliament. He is right: the local rivalry is important, although in recent years the clubs have worked very well together. We have also learned something very important from the fact that Cheltenham have been successful and have got into the Football League. Ours is the largest area in the country that does not have a professional team in the Football League, which just goes to show that we have a real opportunity and real possibilities. At the minute, we have a very young and effective team that is doing well, pushing for promotion and full of local lads. We have real cause to be ambitious in terms of what we are doing on the ground.
	Along came that day in July 200722 July. Local people will be well aware of the famous picture of Meadow Park 8 ft under water. All that could be seen was the top of the crossbars. It was impossible for us to return to Meadow Park, and we have not played in Gloucester sincefor the last 15 months. That was the third time that the ground had flooded in 21 years, which makes Meadow Park uninsurable, so we cannot go back there. There could be serious rainfall and flooding, and if we wanted to play there again it would cost nearly 100,000 to get back in and repair the damage caused by the last set of floods.
	We have been beavering away in the southern premier league. Even though we are playing a long way outside Gloucester, we have the largest away support of any team in our division. That shows the devotion of our fans. Last season, we played in the constituency of my hon. Friend the Member for Stroud (Mr. Drew), at Forest Green. We are very grateful to Forest Green for letting us play there last season, although at a price. This season, we are playing our games in Cirencester, at the home of Cirencester Town. For myself and all other Gloucester City fans, that means a 40-mile round trip to see our local team play a home game, and that is not an acceptable situation for us to be in 15 months after the floods.
	I pay tribute to those involved in running the club. They have kept it afloatpardon the punand alive despite all the difficulties that they have had to face. In particular, I am thinking of someone whom I am proud to say has become a good friendwe spend a lot of time together of latethe chairman, Dave Phillips; Phil Warren, the club's historian and the chair of the supporters trust; Mike Dunstan, the club's press officer; and Tim Harris, the general manager. All of them have made the journey up to London to witness tonight's debate, and that shows their level of devotion. I also pay tribute to Eamonn McGurk, the club's biggest shareholder, who has had to bail it out on many occasions. Most importantly, I should mention the volunteers who muck in week in, week out to help to keep our local team ticking over.
	This debate is a very important occasion for us, and I know that a lot of people in Gloucester will be watching it at home, so it would be remiss of me not to take the opportunity to put a few requests to the Minister. The Football Foundation has been a good friend to my constituency. I play whenever I can; on Thursday nights, I have a kick-about with the reserve team at Abbeymead Rovers. The club has a wonderful new third-generation Astroturf pitch, laid in no small part thanks to the Football Foundation, which has put hundreds of thousands of pounds into that project in Abbeydale. It has also invested a similar sum in a project supporting Quedgeley Wanderers, in the south of my constituency, providing new changing facilities. The Football Foundation is a wonderful organisation that does good work, but I must make it clear that if Gloucester City is to survive as a club, given that it has little resource and has fallen on hard times through no fault of its ownthe fault lies with the floodingwe will need the Football Foundation to step in, support us, probably to the tune of millions of pounds, and help us to find a stadium back in the city.
	Throughout the flooding, Gloucester City football club was frank in putting its concerns to one side and saying, This is about people's lives and about properties. But 15 months have passed and people's lives are moving on. We are heading into an economic downturn, but at times like this people rely on their local sporting institutions more than ever. A thriving football club with our catchment area and our young players, back in the heart of the city of Gloucester, could make an economic difference to our city. What can the Minister do to support us? The Football Foundation has been very helpful in the past, so if she can help to engage it with me, with the club and with our local authorities, that will make a difference.
	I had not planned to talk about specific options tonight, but having spoken to the club, and as the Minister is in her place, I shall briefly mention the two most likely ones for a return, because she could help us on this matter. The first option is to return to Meadow Park. The ground would require a lot of work in order for it to be insurable again. The level of the ground would probably have to be raised, the pitch might even need to be rotated through 180 and new channels might have to be found to release the water. We might even need to take mitigating measures so that other floodplain is available, because we do not want properties to be flooded as a result of raising the pitch level. Thus, an involved, thorough and quick piece of work needs to be done by the Environment Agency. The club has to play this season and the following one at Cirencester Town's ground, so we need a quick solution to give the fans hope for the future that they deserve. Any help that the Minister can give me in engaging the Environment Agency in a possible return to Meadow Park is one avenue that could be taken. That approach may not be possible, because returning may be far too complicated.
	There is another good, strong possibility. Last week, I met the leaders of Gloucester city council. A couple of weeks ago, I met the leaders of Gloucestershire county council. This is not about politics. Across political lines, I have heard only good things from the leaders of both councils, who tell me that they are keen to work with the club and to bring it home as quickly as possible. I viewed another site last Friday, which was Blackbridge playing fieldsa 20 to 30 acre site in the heart of my constituency, which is owned by Gloucestershire county council.
	I look forward to engaging with the council on the possibility of bringing Gloucester City home to the Blackbridge site. We would not need the whole site; a small corner of the site could offer the strong possibility of a modest stadium, a clubhouse and some car parking. It would take only a 50 yd roadat most a 100 yd roadfrom Stroud road, which is one of the busy roads in my constituency, to the ground in a parcel of that land. It stands alongside a strip owned by Network Rail, so I encourage my hon. Friend the Minister to work with me and with local agencies to involve Network Rail in any possible dialogue to speed along any solution for the club at the Blackbridge playing fields.
	I am encouraged, as I say, by the contact that I have had with Gloucestershire county council and Gloucester city council. I believe that the time could well be right now to work together to bring one of the two solutions to the fore, to find a strong business case to present and to work with the Football Foundation to bring the club home.
	Our sporting institutions play a big role in our lives. They certainly play a big role in the life of my constituency.

David Drew: I thank my hon. Friend for his recognition that we hosted Gloucester City last year. Does he agree that one problem in a county such as Gloucestershire is that we have historically had very good football, rugby and cricket, but our facilities have not moved on? The rugby club, as he knows better than I do, has had a difficult job in developing a new stadium. We need outside help, because every area is looking to renew and regenerate. It is about time we did that in Gloucestershire.

Parmjit Dhanda: I am grateful to my hon. Friend for that, not least because he reminds me that there are far greater implications for the community, too. Gloucester City have 120 people involved in their youth teams. A further 100 are involved in coaching and working with young women, too. To have a modern site, albeit a modest one, in the heart of my constituency would make a real difference to all the local communities.
	Just a couple of weeks ago, I was with local fans at a fundraiser for the club. One activist therea diehard fan by the name of Nigel Hughescame up to me. He has recently been widowed; he lost his wife just a few weeks ago. He said, Parmjit, right now at this time in my life, this football club means more to me than you could ever imagine. I know that many other people in the city of Gloucester feel the same way. They are equally passionate about our local club. For Nigel Hughes' sake, for Beverley Hughes, for all Gloucester City supporters and for the city of Gloucester, I hope that my hon. Friend can help me to work with the local authorities, the Football Foundation and the local club to bring Gloucester City back home where they belong.

Barbara Follett: I congratulate my hon. Friend the Member for Gloucester (Mr. Dhanda) on securing the debate and I commend him for the passion with which he talks about his football club. A football club is much more than just somewhere to play sport; it is about identity and family, and I am glad that members of a family have been so supportive of my hon. Friend and that he in turn has been so supportive of them.
	I know from my Stevenage constituency what a difference a regenerated football club has made both to the town's whole ethos and to its economy. Clubs perform a function in the economy. Gloucester City should be proud of my hon. Friend and of the work he is doing for his constituents and the communities who support the club.
	A key element in helping to deliver the Government's commitments to sport, about which I shall say more in a moment, is to ensure that communities across the country have a wide range of good provision, which in turn encourages them to participate more and to lead healthier lives. Not only does sport reduce the chances of ill health; it can also improve skills and confidencesomething we badly need at presentenhance social networks and strengthen social cohesion. As my hon. Friend has demonstrated, the power of sport goes way beyond the pitch, court or track, and Gloucester City football club is a wonderful example of that power.
	Only last week in the House, my right hon. Friend the Secretary of State for Culture, Media and Sport spoke about the Government's key legacy goals for sport, which include creating a world-leading community sports system and getting 1 million more people playing sport. Our goal builds on significant investment in sport over recent years, particularly in facilities. Since 2001, more than 1 billion has been committed to develop new or refurbished facilities through a mix of Exchequer and lottery funding. In total, 4,000 new or refurbished sports facilities are being supported by Government funding programmes. It is clear that the investment is paying off; in the last decade, 65 per cent. of the nation's facilities stock has been either rebuilt or refurbished.
	We have also taken steps to protect places where sport is played, specifically playing fields. After years of having our playing fields sold off, we now have tough measures to protect them. Sport England is a statutory consultee on all planning applications affecting playing fields, and planning guidance to local authorities is clear: no playing field needed by the community should be removed. All that work has brought us to a position where currently 90 per cent. of the population of England is within 20 minutes' travel time of at least two different facilities for sports that are most in demand by the public. I realise that for Gloucester City there is a 40-mile round trip, so the distance is further in that case.
	The Government have provided an unprecedented level of support for sport. However, I stress the fact that local authorities are the main providers of sports and recreation facilities and, as such, are best placed to make decisions about what facilities best meet the needs of the local community. I am glad that my hon. Friend has engaged both the county and the city councils, as I know from my constituency that in the end the solution comes from the councilworking with Stevenage borough council we broke through.

Parmjit Dhanda: I appreciate what my hon. Friend is saying. She rightly sets out the level of funding for sporting infrastructure. Although she is not the sports Minister, does she feel from her understanding of the situation that it is the sort of project that the Football Foundation should and would want to get behind?

Barbara Follett: That is, of course, a matter for the Football Foundation, but I am sure that, as my hon. Friend has raised the matter tonight in the House, it will take it into account and work with Gloucester city council and the county council, as it has with many other authorities, to ensure that we have the provision in England that we need.
	The support that the Government give to local authorities comes mainly through Sport England, which has developed a range of strategic planning tools to assist authorities to modernise their leisure facilities and to ensure that the right facilities are provided in the right locations. That is helping local authorities to identify the gaps and to target resources where they are most needed. Sport England's facilities improvement service is also working closely with local authorities to improve their strategic planning for community sport locally. Additionally, the unprecedented Government investment through Building Schools for the Future offers a number of unique opportunities to local authorities. The Government therefore expect local authorities to consider how new developments can build on the current and anticipated sporting needs of local communities.
	Investment in football is very important. Football is our national game and incredibly popular. However, the peak of the game accounts only for a very small amount of those that are involved in football. As my hon. Friend mentioned, children and young boys and girls are really getting involved at a much lower level. Football authorities recognise the wider impact of the game, especially in the lower leagues and at the grass-roots level. Sport England's active people survey shows that football is as popular an activity in Gloucester as anywhere else in the country.
	Football is one of the sports that have submitted a whole sport plan to Sport England for funding from 2009. That includes how it proposes to invest money in facilities to help to develop the sport. It is right that football receives Government funding, as the sport helps to deliver our sporting aims. That is why the Football Foundation, the premier league, the FA and the Government together have invested more than 300 million in football since 2000. That includes 2 million in community projects in my hon. Friend's constituency of Gloucester. Those projects have ranged from a 400 grant awarded to Gloucester City girls football club for new kit right up to a 426,000 grant to Abbeydale Community Association towards the development of its facilities. In addition, the Government have, through Sport England, invested more than 59 million in community football since 2005.
	Turning specifically to Gloucester City football club, I should first like to acknowledge and congratulate the club on its 125-year history and on its incredible resilience. Having been flooded out of its ground three times during its history, it is remarkable that it has reached that milestone. I note that my hon. Friend is sporting the club's yellow and black tie; it looks like a bee or a wasp, and they are very tenacious insects.
	I was disappointed to learn of the devastating impact that the 2007 floods had on the club's Meadow Park ground. Although all those concerned will have been extremely disappointed about that, I was pleased to note that the football family in Gloucester has come together to help Gloucester City football club find temporary homes, first at Forest Green Rovers football club, and now at Cirencester Town football club.
	I know that the club has been working with a range of interested parties, including the city and county council and the Football Association, at national and county level, to identify appropriate sites for a new stadium. My hon. Friend mentioned the names of some of those sites. I encourage the club to continue discussions with those parties, and to consider the options available through the football stadia improvement fund. I am informed that up to 150,000 could be available from that fund for the development of a new ground. I am also advised that up to 100 millionsorry; I wish it was that much. I am advised that up to 1 million of funding could be available through the Football Foundation to support additional facilities. As I understand it, the club has aspirations to develop a community facility. That funding route may be open to it, if its aim is achieved.
	I urge the local authorities in Gloucester to undertake a full review of their sports provision, to plan strategically for the future and to consider whether the club's desire for a new stadium could be met through the provision made to meet the sporting facility needs of the local community. I ask my hon. Friend to keep my hon. Friend the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Bradford, South (Mr. Sutcliffe), who has responsibility for sport, informed of progress on the issue. In turn, I will inform my hon. Friend the Under-Secretary of the various options that my hon. Friend the Member for Gloucester is considering.
	I wish Gloucester City football club the very best of luck. It is lucky to have my hon. Friend as its constituency Member of Parliament.
	 Question put and agreed to.
	 Adjourned accordingly at Eleven o'clock.